To implement a billing strategy, it’s quite necessary to explore the types of medical billing that dominate the healthcare industry. Physician billing and hospital billing are the exact terminologies that you need to know before stepping into the billing process. In layman’s terms, both billings fall under the same umbrella of medical billing, but their processes are quite distinct, each designed for specific needs and complexities. Understanding the distinction is pivotal for healthcare providers seeking to streamline operations and revenue collections.
Now, let’s delve into physician and hospital billing processes and explore how they differ.
What is Physician Billing?
Physician billing, also known as Professional billing, is a process to bill the claims for payments on behalf of the physicians who have rendered services to patients with insurance coverage. These billing procedures are also used to bill suppliers and non-institutional providers for their services. The form used in this process is CMS-1500 or 837-P. The only distinction between both forms is that CMS-1500 acts as a paper version, whereas 847-P constitutes an electronic variant. “P” stands for professional configuration.
Key features of physician billing include:
- Physician billing covers services provided in practices, clinics, or as part of outpatient procedures.
- Physicians typically opt for the Fee-for-Service model where each service is billed as per the assigned codes (CPT, HCPCS, ICD-10).
- The process of physician billing is relatively straightforward due to fewer entities involved in this process.
How Does Physician Billing Work?
Physician billing is linked with many administrative tasks, including appointment scheduling, patient registration, medical coding, collecting payments, etc. Both in-patient and outpatient services are covered under this process and those services can only be billed after accurate insurance verification. Eligibility and benefits verification is crucial in physician billing as very selective services can be billed as per the policy plan of the patients. The accuracy of insurance verification within physician billing is pivotal for timely reimbursement and overall revenue cycle management.
Challenges in Physician Billing
Physician billing is generally simpler and more cost-effective than hospital billing, but it also comes with its own set of challenges. The challenges in physician billing include:
- This type of billing requires expert knowledge of medical billing codes, insurance regulations, and other technical aspects of the billing process. Without expertise, healthcare providers may face difficulties in submitting accurate and timely claims, resulting in payment delays.
- Another challenge faced in physician billing is the potential for errors and oversights. This happens as most billings are handled by individual healthcare physicians or inefficient billing departments where there is a high risk of mistakes and regulatory issues.
What is Hospital Billing?
Hospital billing, also known as institutional billing, encompasses invoices for services provided during patient stays in healthcare facilities. This includes room charges, nursing care, laboratory services, medical equipment, supplies, radiology, etc. This type of billing uses the claim form UB-04 or 837-I form. The UB-04 refers to the paper version, whereas 837-I remains an electronic variant. “I” stands for the institutional configuration.
Key features of hospital billing include:
- Hospital billing encompasses all services from admission to discharge, including diagnostics, treatment, and facility use.
- Healthcare facilities use complex reimbursement models such as Prospective Payment Systems (PPS) or Diagnosis-Related Groups (DRGs), which consider patient diagnoses and resource use rather than individual procedures.
- Hospital billing requires coordination among multiple departments to ensure complete and accurate claims, making it a complicated process.
How Does Hospital Billing Work?
Unlike physician billing, hospital billing only deals with the billing process and not medical coding. Therefore, the intuitional billers are only trained in billing and collections. Hospital billing is about creating healthcare claims for billpayers, which includes both in-patients and out-patients. This type of billing process is also important in managing the revenue cycle for any hospital.
Challenges in Hospital Billing
Hospital billing is an intricate and challenging process that requires a great deal of resources and expertise. The challenges in hospital billing include:
- The complexity is one of the biggest challenges in hospital billing. Hospital billing involves a wide array of services, from emergency room visits to inpatient care, surgical procedures, diagnostic tests, etc., with their billing requirements or codes. For in-house staff, it can be difficult to ensure that all claims are submitted accurately and on time.
- Another challenge with hospital billing is the high cost involved in the process. Handling the billing process requires a team of specialized personnel, coders, and billers which can be extremely costly, resulting in increased operational expenditure.
Why Understanding the Key Differences Matter?
Efficient billing practices tailored to the specific needs of physician or hospital billing are essential for accurate reimbursements and financial stability. However, these billing processes can be challenging due to a lack of resources, expertise, and specialized knowledge. However, outsourcing these tasks to a skilled billing company can significantly reduce errors, enhance compliance, and allow providers to focus on patient care. Partnering with an experienced revenue cycle management company such as RCM Workshop can ensure optimized billing workflows and improved cash flow for providers seeking to navigate these complexities.
