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What Is Professional Billing?

What Is Professional Billing?

Professional billing in healthcare is a process (or set of processes) in revenue cycle management that includes submitting, processing, and reimbursing medical claims for services rendered by healthcare providers in a facility setting such as a hospital or ambulatory surgical center (ASC). This process ensures that healthcare facilities and the physicians working within them receive proper compensation for their services while being different corporations with different revenue cycle requirements.

Professional billing involves processing charges related to the services provided by physicians, nurses, therapists, and other healthcare practitioners in facility settings and not their normal office. It is different from institutional or technical billing, which relates to services provided in hospitals, surgical centers, radiology centers, or inpatient settings.

The process includes:

  • Patient registration and verification: The billing process begins with accurate patient registration and verification of insurance information. This step lays the foundation for correct billing by ensuring that the patient's insurance details are up to date. Typically, the facility does this and then transfers it to the physician's billing office.

  • Coding: Accurate medical coding is fundamental to professional billing. Healthcare providers assign specific codes (CPT, HCPCS, ICD-10) to describe the services rendered and the related diagnoses. Modifier 26 is added to codes to represent the professional component of the procedure that has been performed.

  • Claim creation and submission: After coding, claims are generated based on the services provided. These claims contain comprehensive information about the patient, the healthcare provider, the services rendered, and the associated codes. The claims are then submitted to the relevant insurance companies, patients, or third-party payers for reimbursement.

  • Adjudication: Upon receiving the claims, insurance companies assess their validity and accuracy. This process, known as adjudication, involves reviewing the codes, verifying coverage, and evaluating the medical necessity of the services. Any discrepancies or issues can lead to claim denial or requests for additional information.

  • Reimbursement: Once the insurance company approves the claim, reimbursement is processed. The amount reimbursed to the healthcare provider is determined by various factors, including the terms of the insurance policy, contractual agreements, and fee schedules.

  • Patient billing: In cases where patients are responsible for co-payments, deductibles, or services not covered by insurance, patient billing is part of the process. Clear and transparent communication regarding patients' financial responsibility fosters trust and reduces confusion.

  • Denial management: Claims can be denied for various reasons, including errors in coding, incomplete documentation, or lack of medical necessity. Effective denial management involves identifying the reasons for denial, rectifying the issues, and resubmitting the claim.

Why Professional Billing Is Important

Professional billing is a critical service for healthcare providers for the following reasons:

  • Financial sustainability: Efficient professional billing ensures that healthcare providers receive timely and accurate reimbursement for their services. This financial stability enables them to maintain quality patient care, invest in advanced medical technologies, and expand their services.

  • Patient experience: A streamlined billing process contributes to a positive patient experience. Patients are more likely to return to a healthcare facility where their billing experiences are hassle-free, transparent, and easy to understand.

  • Compliance and accuracy: Adhering to coding standards and billing regulations is crucial to avoid legal and financial repercussions. Accurate coding and billing practices also prevent instances of fraud and abuse within the healthcare system.

  • Resource optimization: Effective billing processes reduce administrative overhead, allowing healthcare providers to focus on patient care and clinical activities rather than being bogged down by complex billing tasks.

Properly executing professional billing makes sure that healthcare providers are fairly compensated for their services, enhances patient satisfaction, and contributes to the financial sustainability of medical practices. With NextGen’s EPM and revenue cycle consulting, you can improve professional billing metrics such as monthly close time, posting backlogs, and claim status checks, and keep your doctors and patients happy.


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