What Is Professional Billing?
Professional billing covers claims submitted by individual healthcare providers. These include doctors, nurse practitioners, therapists, and other licensed professionals. It applies to outpatient services performed in clinics, offices, or community settings. Providers use the CMS-1500 form for paper claims or the 837-P format for electronic submissions. Professional billing relies on CPT and HCPCS codes to describe the services provided.
Common examples include primary care consultations, physical therapy sessions, and routine diagnostic tests. When a patient visits their family doctor for a checkup, that visit is billed professionally. The same applies to outpatient mental health counseling or chiropractic adjustments.
Key features of professional billing:
- Used by individual practitioners and small group practices
- Focuses on provider-level services in outpatient settings
- Requires CPT and HCPCS procedure codes
- Submitted via CMS-1500 or 837-P forms
- Typically involves simpler claim structures than facility billing
Challenges of Professional Billing
Small practices face unique obstacles when managing professional billing. Limited staff and tight budgets create pressure on every claim submission. Understanding hospital billing vs. professional billing helps practices avoid incorrectly submitting claims:
- Resource Limitations
Solo practitioners and small clinics often lack dedicated billing teams. One person may handle scheduling, coding, and claim submission. This creates bottlenecks and increases the risk of errors. Without proper support, claims get delayed or submitted incorrectly. Revenue suffers when staff members wear too many hats.
- Coding Accuracy
CPT coding requires constant attention to updates and payer-specific rules. A single wrong code can trigger a denial. Many small practices can’t afford certified coders or ongoing training. This leads to undercoding, overcoding, or missing modifiers. The result is lost revenue and potential compliance violations that put the practice at risk.
What Is Hospital Billing?
Hospital billing handles claims for institutional services provided by healthcare facilities. This includes hospitals, surgical centers, skilled nursing facilities, and other institutions. These organizations bill for surgeries, emergency room visits, lab work, radiology services, and inpatient stays. Hospital billing uses the UB-04 form (also called CMS-1450) for paper claims. The electronic version is the 837-I format. Instead of CPT codes alone, facilities use revenue codes to categorize services by department.
For example, when a patient undergoes surgery at a hospital, the facility bills for the operating room, supplies, nursing care, and room charges. Each element has its own revenue code. The surgeon who performs the operation bills separately using professional billing.
Key features of hospital billing:
- Used by hospitals and institutional healthcare facilities
- Covers facility fees, equipment, and support services
- Requires revenue codes plus procedure codes
- Submitted via UB-04 (CMS-1450) or 837-I forms
- Involves complex charge capture across multiple departments
Challenges of Hospital Billing
Hospital billing presents unique complications that don’t exist in smaller settings. The complexity of hospital billing and professional billing requires different approaches and expertise:
- Fragmented Services
Hospitals coordinate dozens of departments for a single patient visit. The lab, pharmacy, radiology, and nursing staff all contribute to care. Each department must capture charges accurately and communicate with the billing team. When one area fails to document properly, the entire claim suffers. This fragmentation creates gaps that lead to underbilling or claim rejections.
- Expensive Infrastructure
Running a hospital billing department requires significant investment. Facilities need specialized software, trained staff, and compliance monitoring systems. Many hospitals spend millions annually on billing infrastructure. Staying current with regulations, payer requirements, and coding updates adds ongoing costs that strain operating budgets.
- Claim Denials
Hospital claims face higher denial rates than professional claims. The complexity of services and multiple payers creates more opportunities for errors. Common issues include missing authorizations, incorrect admission dates, and improper use of modifiers. Each denial requires staff time to research, correct, and resubmit. This delays payment and significantly increases administrative costs.
Key Differences Between Hospital Billing and Professional Billing
Understanding hospital billing vs. professional billing requires looking at several factors. Here’s a clear comparison:
| Factor | Hospital Billing | Professional Billing |
| Scope of Services | Facility-based care, equipment, supplies, room charges | Provider services, consultations, procedures performed by individuals |
| Billable Entity | Hospital, surgical center, skilled nursing facility | Physician, NP, therapist, individual practitioner |
| Forms Used | UB-04 (CMS-1450) or 837-I | CMS-1500 or 837-P |
| Coding Systems | Revenue codes + ICD + CPT/HCPCS | CPT/HCPCS + ICD diagnosis codes |
| Reimbursement Models | DRG, per diem, case rates, fee schedules | Fee-for-service, RVU-based, capitation |
| Payer Types | Medicare Part A, Medicaid institutional, commercial plans | Medicare Part B, Medicaid professional, commercial plans |
These differences matter because mixing the two causes serious problems. Claims get rejected when providers use the wrong form or coding system. Payers expect specific formats based on whether you’re billing as a facility or an individual provider. Getting this wrong delays payment and creates extra work for your team. Bridging both models efficiently requires coordination between departments and automation tools that prevent errors before submission. Solutions like Swift Medical Billing help organizations manage both billing types seamlessly through integrated technology and expert support.
Common Scenarios Where Both Billing Types Work Together
Many healthcare situations require both hospital billing and professional billing to work in sync. Here are four common examples.
Mobile Health Screenings Leading to Facility-Based Treatment
Community health programs often provide mobile screenings for blood pressure, diabetes, or cholesterol. These screenings are billed by the provider who conducts them. When screening results show a problem, patients may need follow-up care at a hospital. The hospital then bills institutionally for diagnostic imaging, lab work, or treatment. Missing documentation between the screening and hospital visit can create claim mismatches. Payers may question medical necessity if the connection isn’t clear.
Hospital Imaging Read by External Physician
A patient goes to a hospital for an MRI or CT scan. The hospital bills institutionally for the technical component, which includes the equipment, technician, and facility costs. A radiologist who works independently reviews the images and writes the diagnostic report. This professional interpretation is billed separately using professional billing. If the service dates don’t match or the CPT codes aren’t synchronized, both claims may face denials. Clear communication between the facility and the reading physician prevents these problems. Organizations managing hospital billing vs. professional billing must ensure proper coordination.
Hospital-Provided Infusion, Physician-Managed Treatment Plan
Chemotherapy or IV antibiotic therapy provides a good example. The hospital administers the infusion in its outpatient center and bills institutionally for the drugs, nursing time, and facility use. The oncologist or infectious disease specialist manages the treatment plan and bills professionally for the medical decision-making and patient monitoring. The plan of care must align across both billing teams. If timelines don’t match or documentation is incomplete, payers may reject one or both claims as duplicates or unrelated.
Emergency Mental Health Admission with Outpatient Therapy
A patient experiencing a mental health crisis may be admitted to a hospital’s psychiatric unit. This inpatient stay is billed institutionally. After discharge, the patient continues care with a therapist for weekly outpatient sessions billed professionally. Coordination between the hospital and outpatient provider is essential. Overlapping billing periods or insufficient justification for continued care can trigger denials. Both teams must clearly document the transition and ongoing medical necessity. A proper understanding of hospital billing and professional billing prevents these coordination failures.
Types of Claims and Forms Used
Different claims require different forms. Here’s what you need to know:
CMS-1500 / 837-P (Professional Billing):
- Used by individual physicians, therapists, and practitioners
- Covers outpatient services, consultations, and office visits
- Paper version: CMS-1500 form
- Electronic version: 837-P transaction
UB-04 / 837-I (Hospital Billing):
- Used by hospitals, surgery centers, and institutional facilities
- Covers inpatient stays, emergency services, and facility charges
- Paper version: UB-04 (also called CMS-1450)
- Electronic version: 837-I transaction
| Form Type | Format | Used By |
| CMS-1500 | Paper | Individual providers |
| 837-P | Electronic | Individual providers |
| UB-04 | Paper | Hospitals and facilities |
| 837-I | Electronic | Hospitals and facilities |
Most payers now require electronic submission. The 837-P and 837-I formats follow HIPAA standards and process faster than paper forms. Knowing which form applies to hospital billing vs. professional billing ensures proper claim submission.
How Swift Can Help You Simplify Both Billing Types
Managing hospital billing and professional billing together is complex. Many organizations struggle with dual systems, different payer rules, and constant coding updates. Swift Medical Billing solves these challenges through advanced automation, certified coding specialists, and proactive denial prevention. Our platform handles both billing types seamlessly, reducing errors and accelerating payment cycles. You get faster reimbursements, improved compliance, and fewer rejected claims.
Swift’s medical billing services address the core pain points discussed in this article. Our team understands the nuances between institutional and professional claims. We manage charge capture, coding accuracy, and claims submission for both models. Whether you’re dealing with hospital billing vs. professional billing challenges, our experts provide solutions. Our revenue cycle management solutions optimize every step from patient registration through final payment posting. Whether you operate a small clinic or a large hospital system, Swift provides the expertise and technology you need to maximize revenue while maintaining compliance.
Don’t let billing complexity cost you money. Contact Swift Medical Billing today to schedule a free billing audit. Our team will analyze your current processes, identify revenue leaks, and show you exactly how we can improve your results. Book your consultation now and discover why healthcare organizations trust Swift to handle their most challenging billing needs.
