Physician Billing vs. Hospital Billing: Key Differences Explained
In the healthcare industry, medical billing is divided into two main categories: physician billing (also called professional billing) and hospital billing (also known as institutional billing). While both processes aim to ensure accurate reimbursement for services provided, the methods, forms, and responsibilities involved are quite different. Understanding these differences is essential for healthcare providers, billing professionals, and organizations looking to streamline revenue cycle management.
What Is Physician Billing?
Physician billing, often referred to as professional billing, covers claims submitted by individual healthcare providers, such as physicians, nurse practitioners, or specialists, for the medical services or procedures they perform.
Forms Used: Claims are submitted using the CMS-1500 (paper) or 837-P (electronic) form. The “P” stands for professional.
Scope: Physician billing involves both billing and coding. Accuracy in coding is critical, as providers bill insurance companies directly for services rendered.
Services Covered: Both inpatient and outpatient services can be billed under this model, depending on the patient’s insurance coverage.
Administrative Role: In physician practices, billing staff are also often responsible for related administrative tasks—such as patient registration, scheduling, and payment collection.
Because the financial health of a medical office depends heavily on prompt and accurate reimbursement, billing teams must have a strong understanding of insurance policies, payer requirements, and compliance regulations.
Outsourcing physician billing to specialized companies can help providers focus more on patient care, while experts manage coding, claim submission, and payment collection efficiently.
What Is Hospital Billing?
Hospital billing, also known as institutional billing, is more complex because it covers a wide range of services provided by hospitals and other healthcare facilities.
Forms Used: Claims are filed using the UB-04 (paper) or 837-I (electronic) form, with “I” standing for institutional.
Scope: Hospital billing includes charges for facility services such as:
Room and board
Nursing care
Laboratory tests
Radiology
Medical equipment
Supplies and medications
Key Difference: Unlike physician billing, hospital billing typically does not include medical coding. Instead, hospital coders separately assign codes, while billing staff focus on claim submission and collections.
Given the number of services and providers involved in hospital-based care, the billing process is significantly more complex compared to physician billing.
Physician Billing vs. Hospital Billing: How They Differ
| Aspect | Physician Billing (Professional) | Hospital Billing (Institutional) |
|---|---|---|
| Forms Used | CMS-1500 / 837-P | UB-04 / 837-I |
| Includes Coding? | Yes, billing + coding | Primarily billing, coding handled separately |
| Services Billed | Inpatient & outpatient physician services | Facility services (nursing, labs, equipment, radiology, etc.) |
| Complexity | Less complex, focuses on provider claims | More complex, multiple departments & services |
| Staff Role | Billing + coding + admin tasks | Billing staff only, coders separate |
Improving Revenue Outcomes in Physician & Hospital Billing
Both physician and hospital billing play a vital role in maintaining healthy cash flow for providers and facilities. To optimize reimbursements and reduce denials:
Ensure accuracy in coding and claim submission to minimize errors.
Track unbilled or missed claims promptly to avoid revenue leakage.
Train staff on payer requirements and compliance regulations, including HIPAA.
Leverage outsourcing when needed—partnering with experienced billing and coding companies can reduce administrative burden and improve payment turnaround.
Adopt technology such as electronic claim submission to streamline workflows and reduce delays.
Final Thoughts
While physician billing and hospital billing both serve the purpose of securing payment for healthcare services, they differ significantly in scope, processes, and complexity. Physician billing focuses on individual provider services and requires strong integration of billing and coding, while hospital billing covers a broader institutional framework involving multiple departments and facility-related charges.
By understanding and addressing these differences, healthcare organizations can improve financial performance, reduce compliance risks, and ensure smoother revenue cycle management.
