Physician Billing vs Hospital Billing

Well, to employ a billing strategy, isn’t it fair to explore the types of medical billing that soars in healthcare industry? Physician billing and hospital billing are the two types to be clearly understood before stepping into the billing process. Prior to claim submission, and following the steps required for medical billing process, it’s very important to figure out if that claim falls under physician billing or hospital billing.

In other words, physician billing is termed as “Professional Billing” and Hospital billing as “Institutional Billing”. However these two come under over all medical billing process. The healthcare professionals involved in the healthcare industry had differentiated between these two terms based on their purpose and the services involved in the billing process.

Let’s find out the purpose of both physician billing and hospital billing to highlight the key difference between them.

What is Physician Billing Services?

  • The purpose of physician billing which is also known as professional billing is to bill the claims to get paid for the medical services or procedures rendered by the physicians or healthcare providers to patients with healthcare insurance.
  • The physician billing form used for billing the claims is CMS-1500 or 837-P. Apart from billing form the CMS-1500 being a paper version and the 837-P an electronic version, there is no difference in these forms.
  • There are cases where Medicaid, Medicare, and other insurance companies accept only electronic claims as the necessary charging strategy. The 837-P claim form is an electronic version of CMS-1500 and “P” stands for professional configuration. An expert physician billing service at times can have multiple responsibilities compared to institutional or hospital billing.
  • Physician billing is a significant process that regulates numerous administrative tasks associated with medical practices like scheduling appointments, greeting patients, check-in and registration, and payment collections.
  • The services billed under physician billing include both in-patient and out-patient and fall under the domains of in-patient and out-patient services that can be billed only after patient verification.
  • Verification is essential because, very selective in-patient and out-patient services will be billed according to the insurance policies of the patient.
  • Please note that physician billing includes the complete medical billing process that involves medical coding too.
  • It means that medical billers have to be trained for both billing and coding processes. However healthcare professionals’ office and hospitals are employed with medical billing and coding teams to perform everyday billing activities.

What is Hospital Billing Services?

  • The purpose of hospital billing is to bill the claims for in-patient and out-patient services provided by hospitals or healthcare organizations. Hospital billing is also termed as institutional billing based on the same reason.
  • Additionally, hospital billing also bills for the services rendered by skilled nurses. It also bill claims for medical facilities such as laboratory services, medical equipment and supplies, and radiology, etc.
  • Hospital billing uses the claim form UB-04 or 837-I form. The UB-04 is the paper version and 837-I form remains as electronic version. “I” stands for the institutional configuration.
  • The only difference for physician billing and hospital billing is that, hospital or institutional billing deals only with medical billing process and not with medical coding. Whereas physician billing includes medical coding.
  • The appointed medical biller for hospitals only performs duties of billing and collections. Compared to physician billing, hospital billing is much complicated.

Related: 4 Things To Check Before Outsourcing Hospital Billing Services

How to boost revenue with Physician billing and Hospital Billing?

  • When it comes to revenue payments or increasing revenue reimbursements, both physician and hospital billing stay dissimilar. Yet, their processes play a huge role in preventing denials and fraudulent deeds.
  • It becomes physician biller’s first priority to check that no claims or services go unbilled or missed. But the staff must be aware of billing and coding errors while filing the claims. Errors are caused due to various reasons and one of them might be technical errors too.
  • Most of the hospitals and healthcare providers choose outsourcing physician billing and hospital billing services as best option to avoid errors and payment loss.
  • Hospital billing will have special tasks unlike that of physician billing. One of the major functions of institutional or hospital billers are the accomplishment of collections and in charge of billing.
  • Hospital coding is considered to be extremely complex than physician coding and is another reason for which institutional cases are carried only by coding experts.

Different types of Medical Billing Systems:

  • There are three types of medical billing systems in healthcare industry. They are :
  1. Closed
  2. Open and
  3. Isolated


    A closed medical billing system does not allow transfers. In medical billing terms, it represents that a closed system must only focus on one single practice and the foremost example for closed medical billing system is EMR- Electronic Medical Record. They don’t encourage collaboration with other healthcare professionals and healthcare facilities.


    An open system allows the transfers across healthcare professionals, practices, facilities, etc. And an example of an open medical billing system is using EHR, or electronic health record. EHR is highly collaborative and enables everyone to be under privacy to the patient’s healthcare. An open medical billing system represents necessity to communicate and collaborate efficiently.


    An Isolated medical billing system is no more used in the healthcare industry. It’s completely removed from healthcare organizations, hospitals and healthcare facilities. PHR, or Personal Health Record, is used in isolated medical billing system and the patients hold all their healthcare records and are allowed manage them. These records are entirely different and shouldn’t replace EMR or EHR as it’s simply to help patients manage their health information.  As PHR can’t legally replace official healthcare records, isolated medical billing systems aren’t commonly used.

  • Both physician and hospital billing staff has the access to private, confidential patient health information and must know the ways to avoid violating HIPAA privacy and security rules.

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