Did you know that according to the Council for Affordable Quality Healthcare (CAQH), 10 billion claims are submitted annually? In healthcare, submitted claims fall under two primary categories: institutional claims or professional claims.
Healthcare organizations use these claims to bill payers for services rendered to patients. Facilities that submit institutional claims may include:
- Home health agencies (HHA)
- Skilled nursing facilities (SNFs)
- Hospitals
- Ambulatory surgery centers (ASCs)
Professional claims are used by physicians, non-physicians, and other healthcare practitioners to request reimbursement from payers. These professionals may include:
- Nurse practitioners (NPs)
- Therapists
- Physicians
- Durable medical equipment (DME) suppliers
- Other licensed practitioners
Let’s learn more about these two types of claims before moving to their differences.
What are Institutional Claims?
Healthcare facilities use institutional claims when seeking reimbursement for the facility-level costs of patient care. These claims primarily capture facility resources and services rather than the professional services provided by individual clinicians.
The expenses captured during institutional billing and reported on the claim may include:
- Laboratory tests and imaging performed
- Operating room costs
- Administrative staff
- Medical supplies and equipment
- Other resources consumed
Types of Institutional Claims
Medical facilities may submit the following types of institutional claims:
Inpatient Claims
Inpatient claims are submitted for services provided when a patient is formally admitted as an inpatient. Typically, such claims are paid according to the Medicare Inpatient Prospective Payment System (IPPS) through the Diagnosis-Related Groups (DRGs). They bundle all facility costs into an episode payment for reimbursement.
Outpatient Claims
Outpatient claims are for patients who are not admitted as inpatients. Therefore, this may include patients receiving services such as:
- Outpatient procedures
- Observation services
- Emergency department visits
- Hospital-based lab and imaging
Generally, these services are reimbursed through the Medicare Outpatient Prospective Payment System (OPPS) and the Ambulatory Payment Classifications (APCs).
Skilled Nursing Facility (SNF) Claims
SNFs use these claims to bill for post-acute care when Medicare coverage requirements, including a qualifying inpatient hospital stay, are met. SNF services are reimbursed under the Patient-Driven Payment Model (PDPM), which uses a per diem payment methodology.
Home Health Agency (HHA) Claims
These claims are submitted by Medicare-certified home health agencies for covered home health services, including skilled nursing and therapy services. They may also include covered home health aide services when provided in conjunction with qualifying skilled services.
Ambulatory Surgery Center (ASC) Claims
ASCs request reimbursement for facility costs of outpatient surgical procedures through these claims. The cost is paid under the ASC payment system, utilizing ASC payment groups, which generally offer lower rates than hospital outpatient payments.
What is the UB-04 Claim Form?
The UB-04 claim form, also recognized as CMS-1450, is the standard claim used by institutional providers. The form contains 81 Form Locators used to report billing information. It captures facility-specific information and institutional billing details that are not reported on the CMS-1500 form.
- Extended service dates
- Multiple facility departments
- Unique institutional code sets
Important Note: Although paper UB-04 forms traditionally use red dropout ink, most facilities today submit claims electronically, via the 837 institutional claim.
Types of Billing Codes for Institutional Claims
Claims submitted by healthcare facilities can include a wider range of code sets than professional claims, including:
| Billing Code | What It Indicates |
|---|---|
| Value Codes & Amounts | Report specific financial or non-financial information, such as deductible amounts, coinsurance details, or other claim-related values. |
| Type of Bill (TOB) | Identifies the facility type, billing sequence, and care setting for the claim. |
| Revenue Codes (4-digit) | Identify the department, service category, or cost center associated with the billed charge. |
| Occurrence Codes & Dates | Record essential administrative or clinical events & corresponding dates. |
| ICD-10-PCS Procedure Codes | Describe procedures performed during an inpatient hospital stay. |
| ICD-10-CM Diagnosis Codes | Specify the patient’s diagnoses and medical conditions under treatment. |
| CPT/HCPCS Codes | Identify outpatient services, procedures, medical equipment, and supplies billed on the claim. |
| Condition Codes | Indicate unique circumstances that affect claim processing. |
What are Professional Claims?
Healthcare professionals and entities use professional claims to bill for provider services personally rendered to patients. Unlike institutional or facility billing, professional billing captures the provider’s professional services during an encounter, including the:
- Time
- Expertise
- Clinical decision-making
A professional claim can be submitted for each patient encounter, regardless of whether that encounter occurred in:
- Office
- Hospital
- ASC
- Telehealth setting
Types of Professional Claims
Both institutional and professional claims have different types depending on their purpose and usage. The following is a quick breakdown of the types of claims that may be submitted by healthcare professionals:
Office Visit Claims
Office visit claims include evaluation and management (E/M) service codes (such as 99202-99215) reported by eligible healthcare professionals. They may apply to new and established outpatient visits or patient office visits.
Telehealth Claims
When a CMS-1500 professional claim is submitted with the appropriate telehealth place of service (POS) code and required modifiers based on payer policy, it may qualify for telehealth reimbursement.
Surgical Procedure Claims
These claims are submitted by the operating surgeon, charging for the physician’s professional work. Typically, such claims are filed separately from the hospital’s claim, even when the procedure is the same.
Specialist Consultation Claims
These claims are submitted by specialists, such as cardiologists, orthopedic surgeons, and neurologists, for the professional services they provide. The services may include inpatient evaluations and specialist visits that are billed using hospital E/M codes on the CMS-1500 claim.
Anesthesia Claims
Anesthesia claims are submitted by an independent anesthesiologist or a certified registered nurse anesthetist (CRNA), using anesthesia CPT codes (00100-01999) and time and base units.
What is the CMS-1500 Form?
The CMS-1500, historically recognized as HCFA-1500, is the paper form used for professional billing. The form contains 33 numbered fields that record:
- Provider identity
- Patient demographics
- Insurance information
- Specific services rendered
In the CMS-1500 professional claim form, Box 24 contains service line information. Here, the billing teams can add the:
- Modifiers
- CPT codes
- Diagnosis identifiers
- Applicable charges
- Recorded units for each procedure
Box 21 reports ICD-10-CM diagnosis codes, while Box 24E links each service line to the applicable diagnosis pointer.
Types of Billing Codes for Professional Claims
In medical billing, claims submitted by healthcare professionals may be billed using the following codes:
| Billing Code | What It Indicates |
|---|---|
| CPT Codes | Indicate procedures and medical services rendered by the provider. |
| HCPCS Level II Codes | Reported for items and services not represented by CPT codes, such as DME, certain drugs, supplies, and ambulance services. |
| ICD-10-CM Diagnosis Codes | Report diagnoses of the patient and support medical necessity for the services billed. |
| CPT Modifiers | Capture additional information regarding a procedure or CPT services. |
| Place of Service (POS) Codes | Report the place where a service was rendered for reimbursement purposes. |
Differences Between Institutional and Professional Claims
Understanding the difference between institutional billing and professional billing becomes easier when we distinguish between these claims.
| Factor | Professional Claims | Institutional Claims |
|---|---|---|
| Paper Claim Form | CMS-1500 (HCFA-1500). | UB-04 (CMS-1450). |
| Primary Code Sets | CPT, HCPCS Level II, ICD-10-CM. | Revenue codes, CPT/HCPCS (outpatient), ICD-10-CM, ICD-10-PCS (inpatient). |
| Billed By | Physicians, NPs, PAs, therapists, individual practitioners, and DME suppliers. | Hospitals, SNFs, ASCs, home health agencies, rehabilitation centers, and other facilities. |
| Global Surgical Period | Applies. Postoperative services may be bundled. | Generally, not applicable. |
| NPI Used | Rendering provider Type 1 NPI. | Facility Type 2 NPI. |
| Services Billed | Professional/provider services. | Facility services and overhead. |
| Payment Method | Medicare Physician Fee Schedule (RVU-based fee-for-service). | DRGs, APCs, per diem, or cost-based reimbursement. |
| Electronic Claim | 837P | 837I |
| Claim Layout | 33 numbered fields. | 81 numbered fields. |
Challenges in Managing Institutional & Professional Claims
Both these claim types are integral parts of medical billing. However, billing professionals often face various challenges when submitting them. These challenges vary depending on the type of claim and billing environment. The following are some of the most common issues:
Challenges in Institutional Claims
Institutional billing can be more complex because hospitals and facilities must comply with additional billing rules. A facility’s billing team commonly encounters the following challenges when filing claims:
- Selecting incorrect or mismatched revenue codes.
- Using complex billing software with multiple modules and workflows makes data entry, review, and submission challenging.
- Institutional claims must comply with strict Medicare billing and documentation requirements. This increases the risk of denials or payment delays when requirements are overlooked.
- Staff shortages, high claim volumes, and limited training can lead to billing errors and slow claim processing.
- Differences in workflows, coding practices, and data integration between systems can create claim errors and delay reimbursement.
Challenges in Managing Professional Claims
When providers submit claims for their professional service reimbursement, they may face several challenges, such as:
- Claim rejections and denials due to payer policy violations.
- Changing payer policies make compliance more challenging.
- Coding complexities increase the risk of errors.
- Rising patient financial responsibility can extend administrative challenges.
- Staffing challenges negatively impact the performance of the practice.
However, practices aiming to optimize professional claim submissions and billing operations should adopt structured processes. Accurate coding, complete documentation, efficient front-end processes, and stronger payer relationships are essential steps to reduce these challenges.
Protect Your Revenue with NeuraBill’s Billing & Coding Services
Understanding the difference between institutional billing and professional billing impacts the outcome of a claim. Handling claims submitted by healthcare professionals and facilities requires a billing team that understands the structural logic of each claim type, form, and reimbursement system.
If your internal billing team finds it challenging to distinguish and manage the two claims, consider opting for NeuraBill’s medical billing and coding services. We assist medical practices in achieving claim accuracy and compliance, so they can enjoy an increased bottom line.
