Professional Billing VS Hospital Billing

1. What is Professional Billing?

• Professional Billing (PB) is the billing of services provided by a physician or other healthcare professional.
• It mainly represents the provider's professional service.
• Professional billing can include services such as:
• Evaluation & Management (E/M) services
• Office visits and consultations
• Professional procedures
• Physician interpretation of certain diagnostic services
• Example: Suppose a patient visits a hospital and sees a cardiologist. The cardiologist examines the patient and performs an ECG. The cardiologist's services will be billed through Professional Billing.
• A cardiologist provides an office visit, so an E&M code will be billed for Professional Billing.
  

2. What is Hospital Billing?

• Hospital Billing (HB) is used to bill for the services and resources provided by a hospital or facility.
• It is also commonly called Institutional Billing or Facility Billing.
• Hospital billing can include services such as:
• Room charges
• Nursing services
• Operating room
• Laboratory
• Radiology
• Medical supplies
• Drugs
• Medical equipment
• Facility services
• Example: The same patient visits the hospital for an ECG.
• There can be two separate bills:
• Professional Billing: The cardiologist's professional service.
• Hospital Billing: The hospital's facility, equipment, supplies, and other applicable resources used to provide the service.

3. Claim Form Used in Professional Billing vs Hospital Billing

• Professional Billing: 
• Professional services are commonly billed using the CMS-1500 claim form for paper claims.
• The electronic equivalent is generally the 837P (837 Professional) transaction.
• Hospital Billing:
• Hospital and other institutional services are commonly billed using the UB-04 (CMS-1450) claim form for paper claims.
• The electronic equivalent is generally the 837I (837 Institutional) transaction.

4. POS vs Revenue Code

• Professional Billing: 
• Professional claims use Place of Service codes to identify where the professional service was provided.
• Example: A physician provides a service in an outpatient hospital → the professional claim may report POS 22.
• Hospital Billing:
• Hospital claims use Revenue Codes to identify the type of hospital service or department associated with the charge.
• Example: A hospital claim may contain revenue codes associated with, Room and board, Emergency room, Laboratory, Radiology, Operating room, Pharmacy, Medical supplies, etc.

5. Professional Fee, DRG & APC – Reimbursement Methodologies

• Professional Fee – Professional Billing
• Professional services are generally reimbursed using a professional fee methodology.
• The physician or other healthcare professional reports the services performed using applicable: CPT codes, HCPCS codes, Modifiers, Diagnosis codes, Place of Service
• The payer then determines the professional reimbursement based on the applicable fee schedule or other payment methodology.
• DRG – Mainly for Inpatient Hospital Billing
• DRG (Diagnosis-Related Group) is mainly used for inpatient hospital reimbursement under Medicare's inpatient prospective payment system and other payment arrangements that use DRGs.
• The patient's inpatient stay is grouped into a DRG based on factors such as: Diagnosis, Procedures, Complications and comorbidities, Other patient and stay-related information
• The hospital is generally reimbursed based on the applicable DRG rather than simply adding up every individual hospital charge.
• APC – Mainly for Hospital Outpatient Billing
• APC (Ambulatory Payment Classification) is used for certain hospital outpatient services, particularly under Medicare's Outpatient Prospective Payment System (OPPS).
• Hospital outpatient services are grouped into APCs based on the services provided.

6. CPT vs ICD-10-PCS

• Professional Billing: 
• In Professional Billing, CPT codes are used to report the services and procedures performed by the physician or other healthcare professional.
• For example, if a surgeon performs a procedure, the surgeon reports the professional service using the appropriate CPT code.
• Hospital Billing:
• Hospital Billing can also use CPT codes, especially when the hospital provides outpatient services.
• For example, a patient comes to the hospital for an outpatient procedure. The hospital may report an applicable CPT/HCPCS code to identify the service provided by the facility.
• However, when the patient is admitted as an inpatient, the hospital uses ICD-10-PCS to report the procedures performed during the inpatient stay.