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Institutional Vs. Professional Claims: A Detailed Comparison

Managing healthcare claims in a medical billing process can be complex, with various types and specifications. Both medical facilities and providers can submit claims on their own. Understanding the differences between institutional and professional claims is crucial for healthcare providers and billing professionals. This comparison will help you understand the attributes’ roles in the claim-submitting process. Let’s discuss the institutional Vs—professional claims in medical billing.

What are Professional Claims?

Professional claims are billing documents submitted by providers for services rendered. These services can range from consultations to surgeries, encompassing any care provided professionally. Such claims are typically submitted using the CMS-1500 form, a standard for healthcare claims submitted to Medicare and Medicaid.

What are Institutional Claims?

Institutional claims differ from professional claims in that they are used by facilities like hospitals, nursing homes, or outpatient clinics to reimburse expenses. These claims are submitted via the UB-04 (CMS-1450) form, which accommodates the complex billing requirements of institutions.

Types of Professional Claims

types of professional claims in medical billing

Physician services

Physician services comprise diagnostic and treatment services provided by licensed doctors. A physician or doctor conducts the diagnosis of disease and provides proper treatment related to various specialties. These specialties include cardiologists, general practitioners, internists, surgeons, pediatricians, and psychiatrists. These medical professionals then submit the claims to reimburse the service they render.

Hospital Service

Hospital service Refers to professional care given in a hospital setting, excluding the facility fees. Patients who require more medical care than what their doctor can deliver at home or in the office can receive it in hospitals. These hospitals also provide all medical services, from urgent surgery to standard checkups, and submit claims to reimburse these services.

Pharmaceutical Service

A pharmaceutical service covers the dispensing and administration of drugs by a healthcare professional. Pharmaceutical businesses create drugs to address conditions including diabetes and high blood pressure. These drugs are also sold through pharmacies nationwide, where pharmacists fill prescriptions for people who require them and submit the claims.

Types of Institutional Claims

institutional claims in medical billing

Outpatient

Patients who are not hospitalized can receive outpatient services. Doctors who treat patients at their clinic or office submit these claims. The most typical kind of outpatient claim is one for a medical visit. However, they can also involve going to mental health specialists and other medical providers like eye or dental doctors.

Inpatient

Patients who have at least one night in the hospital can file inpatient claims. The hospital files these claims when a patient is brought in for treatment. In addition, these claims might cover accommodation expenses for extended stays at hospital wards or intensive care units (ICUs), in addition to examinations, treatments, operations, and other medical services.

Third-party payers

Insurance companies and other organizations that settle claims on behalf of the insured are referred to as third-party payers. Payers by third parties who don’t fall under any other heading. For example, healthcare providers are frequently compensated by workers’ compensation or disability insurance companies for services rendered to their members or policyholders.

Employer self-funded plans

Wherein the employer directly funds the costs of medical claims made by enrollees. Employer-funded, self-funded health plans usually compensate healthcare providers for treating their employees and families.

Key Differences Between Institutional and Professional Claims

The significant differences between institutional and professional claims revolve around the form used, the provider type, the services billed, and the specifics of the billing codes and procedures. Let’s discuss the significant differences between institutional and professional claims in detail.

Type of Claim Form

Professional claims utilize the CMS-1500 form, designed for non-institutional providers and suppliers to bill Medicare Carriers or Part B payers. On the other hand, institutional claims require using the UB-04 (CMS-1450) form. This is used by institutions such as hospitals, skilled nursing facilities, and outpatient surgical centers to bill Medicare Fiscal Intermediaries or Part A/B and Tricare payers.

Provider Type

Individual healthcare providers submit professional claims, including doctors, nurses, and therapists. Institutional claims are submitted by entities like hospitals, nursing facilities, and clinics for services provided under their roof.

Services Billed

The services billed on professional claims are tied directly to the individual healthcare provider’s actions – consultations, surgeries, therapy sessions, etc. Institutional claims bill for the use of the facility– room stays, use of medical equipment, and so on.

Billing NPI

The National Provider Identifier (NPI) differentiates between individual healthcare providers (for professional claims) and institutions (for institutional claims). This 10-digit identifier is mandatory for all healthcare providers as per HIPAA.

Revenue Codes

Only on institutional claims are revenue codes used to categorize the type of service or accommodation provided. For example, different codes are used for emergency room services, laboratory services, or pharmacy services.

Condition Codes

These are more prevalent in institutional claims and are used to convey information about conditions that may affect the processing of the claim, like if the service is related to a work-related injury.

Use of Modifiers

Professional claims often include modifiers—two-digit codes attached to procedure codes—to provide additional information about the service performed, like if a procedure was more complex than usual.

Charges

Institutional claims include charges for room and board and other facility-related costs, whereas professional claims typically involve only the charges for the individual provider’s services.

Resubmission Codes

These codes indicate why a claim is being resubmitted and can differ between professional and institutional claims, reflecting the reasons for resubmission relevant to each claim type.

Attachments

The nature of attachments, such as medical records or accident reports, and when necessary, vary significantly between professional and institutional claims due to the different information required to substantiate the claim.

Institutional Vs. Professional Claims: Comparison Table

AttributeProfessional ClaimsInstitutional Claims
DefinitionBilling documents submitted by providers for services rendered.Used by facilities to reimburse expenses for services provided.
Typical Form UsedCMS-1500 form.UB-04 (CMS-1450) form.
ProvidersIndividual healthcare providers (physicians, therapists, etc.).Facilities (hospitals, nursing homes, outpatient clinics).
Examples of ServicesPhysician services, hospital services, and pharmaceutical services.Outpatient, inpatient, third-party payers, employer self-funded plans.
Billing for ServicesDirect healthcare provider actions (consultations, surgeries).Use of facility resources (room stays, medical equipment).
Billing NPIIndividual healthcare providers have unique NPIs.Institutions have unique NPIs.
Revenue CodesNot typically used.Used to categorize the type of service or accommodation (e.g., emergency room, pharmacy).
Condition CodesLess prevalent, occasionally used.Commonly used to convey conditions affecting claim processing.
Use of ModifiersInclude modifiers for additional information about the service performed.Less commonly use modifiers.
ChargesOnly for individual provider’s services.Include room and board and other facility-related costs.
Resubmission CodesIndicate why a claim is being resubmitted, reflecting professional services.Indicate why a claim is being resubmitted, reflecting institutional services.
AttachmentsMedical records or reports relevant to the individual service provided.Medical records or reports relevant to the facility services provided.

How to Manage Institutional and Professional Claims

Medical practices and providers must understand these differences to ensure that claims are submitted correctly and efficiently. Incorrect forms or improperly filled details can result in claim rejections or delays in payment, which can have financial repercussions for the practice.

Additionally, understanding the nuances can help in proper coding and billing, directly impacting revenue cycle management. Providers should train their billing staff accordingly and stay updated with the latest billing regulations and requirements to maintain compliance and optimize reimbursements.

How to Manage Institutional and Professional Claims in Medical Billing

Accurate Patient Identification

Practices must ensure the correct patient identity and insurance details by verifying the patient name, ID and date of birth. 

Billing and Coding Standards

Remain-to-date with the latest coding standards like ICD-10, CPT, and HCPCS. Ensure accurate coding to avoid denied claims.

Electronic Systems

Implement EHR and billing systems to reduce billing and coding errors and speed up claim submission and claims scrubbing process.

Staff Training

Train the coders and billers on the latest healthcare regulations and compliance to maintain accuracy in claims management.

Audit Systems

Implement a system to audit claims before and after submission to detect and fix the errors and prevent future denials.

Communication with Payers

Establish the open line of communication with insurance payers to resolve the claims submission issues quickly.

Claims Adjudication Monitoring

Regularly monitor the adjudication process to understand the reasons behind denials or rejections and fix them properly.

Documentation Culture

Ensure clear and concise documentation within the practice for claims accuracy.

Follow-up Procedures

Regularly follow up on unpaid claims to help manage revenue flow.

Data Analytics

Utilize the data analytics to identify patterns in claim denials and improve overall billing processes.

Final Thoughts

Healthcare providers must understand the major difference between institutional and professional in the billing and RCM process. By understanding and applying best practices to manage the institutional and professional claims, healthcare providers can ensure a smoother billing process, improve revenue cycle management, and ultimately contribute to better patient care and satisfaction.

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