Understanding the distinction between institutional claim and professional claim is quite essential for medical providers, billing professionals, and healthcare administrators in this world of healthcare reimbursements. The two claims discussed here represent different roles of the healthcare billing process. These claims are also submitted using two different processes done by two different departments. We will explore here how those processes are done and why these matters in the world of medical billing.
What are Institutional Claims
Institutional claims involve billing for inpatient and outpatient services provided by healthcare facilities like hospitals. This process is commonly known as institutional billing, and it’s often referred to as hospital billing as well.
These claims mainly cover professional nursing services. They also include a range of other services, such as:
- Laboratory testing
- Health products
- Radiology, and more.
What is Professional Claims
Professional billing handles the charges for medical services or treatments provided by healthcare professionals or physicians to patients with insurance. That’s why it’s often called physician billing. The medical office takes care of the administrative side of the practice, which includes tasks like:
- Patient visits
- Registration and verifications
- And other services, including medical billing.
Professional Claims examples include:
- Office visits with a primary care physician
- Specialist consultations
- Surgical procedures performed by a surgeon
- Physical therapy sessions
- Mental health counseling
Main Differences between Professional Claims and Institutional Claims
For accurate billing, knowing the difference between professional claims and institutional claims is very important. Some primary differences are as follows:
Entity Submission
Institutional Claims: Submitted by facilities that include hospitals and clinics
Professional Claims: Submitted by individual providers such as doctors and therapists
Form used
Institutional Claims: Use the UB-04 (CMS-1450) form.
Professional Claims: Use the CMS-1500 form.
Services Covered
Institutional Claims: Covers facility-related services including room charges, nursing care, and equipment usage.
Professional Claims: Covers specifically provider-related services like diagnosis, treatment, and procedures.
Focus on Billing
Institutional Claims: Puts more focus on billing methods and facility-level charges.
Professional Claims: Clear focus on medical coding and provider-level services.
Complexity
Institutional Claims: Generally, institutional claims are more complex due to multiple service lines and revenue codes.
Professional Claims: Professional claims are simpler, focusing on individual services rendered.
Why these changes matter in Medical Billing Services
For medical billing companies, understanding the differences between institutional and professional claims is critical. This is because each sort of claim necessitates a unique set of skills, software capabilities, and compliance understanding. If not addressed, inaccuracies in these claim type submissions can result in delayed payments, compliance difficulties, and even outright denials.
Compliance and Accuracy
Institutional claims frequently need compliance with Medicare’s Prospective Payment System (PPS), whereas professional claims must follow stringent CPT and ICD-10 coding rules. Billing services must guarantee that claims are properly categorized and filed to prevent audits and fines.
Reimbursement Timelines
Because institutional claims often involve higher dollar amounts and more complex services, they may undergo more rigorous scrutiny by payers. Professional claims, being more straightforward, are typically processed faster. Billing services must manage these timelines effectively to maintain cash flow for healthcare providers.
Software and Workflow Differences
Medical billing software must be capable of handling both UB-04 and CMS-1500 forms. Additionally, workflows for processing institutional and professional claims differ significantly. For example, institutional billing may require coordination with multiple departments within a hospital, while professional billing is often managed within a single practice.
Common Challenges in Handling Institutional and Professional Claims
Errors in Coding
Improper use of CPT and DRG (Diagnosis-Related Group) Codes mostly are the reason for claim denials. In particular, professional claims are more sensitive to accurate coding than institutional claims.
Duplicate Billing
When the provider and the institution both bill for the same services, it produces duplicate claims. It is essential to have crystal clear coordination between providers and institutional billing teams to avoid billing duplication.
Authorization and Eligibility
Both claim types require verification of patient eligibility and prior authorization. However, institutional claims often involve more extensive pre-authorization due to the higher cost of services.
Denial Management
Denials can occur for both claim types, but the reasons and resolution processes may differ. Professional claims may be denied for incorrect coding, while institutional claims may be denied for lack of medical necessity or missing documentation.
Conclusion – The Way Forward
The difference between Institutional Claims and Professional Claims is a lot more than just some differences in the paperwork. This evaluation clearly depicts the many roles that these claims play in the healthcare business, as determined by the institutions and providers involved. People involved in medical billing services must grasp these distinctions because they are critical to proper medical billing, prompt reimbursement, and regulatory compliance.
