Many Americans receive medical bills that confuse them and are unnecessarily stressful. Over the last five decades, as healthcare services have become more specialized, medical billing has evolved into two distinct systems, hospital billing and professional billing, to manage the wide range of services offered to patients.

The American Hospital Association reports that billing errors cost the U.S. healthcare system over $265 billion annually due to coding errors, rejected claims, and uncoordinated processes. Such issues often lead to patient confusion and delayed reimbursements.

Many people do not realize that one hospital visit can generate multiple bills, one from the hospital for facility services and another from the doctor for professional services. Our hospital billing services ensure that every charge related to institutional claims is accurately captured, reducing errors and improving reimbursement timelines for healthcare providers.

What Is Hospital Billing?

Hospital billing, also known as institutional billing or facility billing, covers the costs associated with a hospital’s facility, staff, and medical equipment. This billing type traces back to the 1960s, when Medicare Part A required hospitals to track operational costs separately from physician services.

How Hospital Billing Works

Hospital billing applies to inpatient and outpatient services provided within a hospital or healthcare facility. These bills represent the institutional claim submitted by hospitals to insurance companies.

Common hospital services include:

• Lodging and food costs for residents
• Facility charges of the emergency department
• Nursing and 24-hour inpatient care
• Medical items such as gauze and surgical equipment
• Diagnostic testing, imaging, and laboratory services
• Operating room and recovery room charges
• Equipment usage (for example, a ventilator, monitor, or MRI machine) 
• Inpatient pharmacy charge

Hospital billing relies on a detailed coding system that includes:

• ICD-10-CM for diagnoses
• ICD-10-PCS for inpatient procedures
• HCPCS Level II codes for medical supplies and non-physician services
• Revenue codes for departmental billing
• DRGs (Diagnosis-Related Groups) to group inpatient stays into payment categories

Institutional claims are submitted using the UB-04 (CMS-1450) form, which itemizes facility-based costs and services.
Because hospitals handle multiple departments, this process is more complex and time-consuming, often taking 30–90 days to process.

Types of Services Billed

• Inpatient services are provided to patients who are admitted for a treatment or surgery requiring an overnight stay or longer.  Inpatient billing utilization means that hospitals using the UB-04 (CMS-1450) claim form, reporting ICD-10-CM and ICD-10-PCS codes. 
• Outpatient billing is for patients who receive same-day care for services. Examples of outpatient care would be the emergency room, imaging, and patients who are also typically treated by a minor procedure, still meeting the same-day criteria. 
• Ancillary services are the supportive diagnostic, therapeutic, and custodial services that supplement the care provided by physicians, hospitals, or healthcare facilities. These services are billed using CPT, HCPCS, and revenue codes, depending on the type of service and payer requirements.

What Is Professional Billing?

Professional billing (also referred to as provider or physician billing) pertains to the services rendered by individual healthcare providers, such as physicians, surgeons, anesthesiologists, and other specialists.  

Professional billing differs from hospital billing in that it is not based on the facility or equipment used, but rather on the provider’s skill and time. Professional billing is typically billed under Medicare Part B and is generally healthcare provided in an outpatient-based or physician-focused fashion.

This billing involves filing a professional claim using a CMS-1500 form. The claim will include CPT (Current Procedural Terminology) codes and ICD-10 diagnosis codes that link the patient’s condition to a provider’s treatment. 

Professional billing includes: 

• Doctor visits and follow-up visits 
• Surgical care is performed by a provider 
• Diagnostic readings (radiology, cardiology, pathology) 
• Anesthesia and post-operative monitoring 
• Consultations and second opinions from specialists 

Professional billing usually involves a faster and less complex process than hospital billing, and smaller clinics or billing departments are able to comfortably manage these claims; however, correct billing is essential to comply with each payer’s guidelines. 

Providers want to use accurate CPT and ICD-10 billing, as this provides better documentation, helps avoid denials, and complies with the AMA and CMS.

Key Differences Between Institutional Billing and Provider Billing

Aspect	Institutional Billing (Hospital / Facility Billing)	Provider Billing (Professional / Physician Billing)
Definition	It refers to billing for facility-based services provided in hospitals, clinics, and other healthcare institutions. It includes the operational costs and technical resources used in patient care.	It refers to billing for individual healthcare provider services such as consultations, procedures, and interpretations performed by physicians or specialists.
Billing	Hospitals, medical centers, rehabilitation facilities, skilled nursing facilities, and outpatient departments.	Individual physicians, surgeons, anesthesiologists, radiologists, and other healthcare professionals.
Primary Focus	These are the charges for the use of hospital infrastructure, staff, and medical equipment.	These are the charges for the professional expertise and time of the healthcare provider.
Claim Form Used	UB-04 (CMS-1450) is used to submit institutional claims under Medicare Part A.	CMS-1500 is used to submit professional claims under Medicare Part B.
Coding Systems Used	It uses ICD-10-CM, ICD-10-PCS, HCPCS Level II, DRGs, and Revenue Codes for facility-level billing.	It uses CPT, HCPCS Level II, ICD-10-CM, and Modifiers for provider-level billing.
Type of Claim	Institutional claims are submitted by healthcare facilities.	Professional claims are submitted by individual or group providers.
Covered Services	These facilities include room and board, nursing care, facility supplies, equipment use, lab tests, and ancillary services.	These facilities take into account physician consultations, exams, surgeries, and diagnostic interpretations.
Insurance Coverage	These charges are billed under Medicare Part A (covers facility charges).	These charges are billed under Medicare Part B (covers professional services).
Billing Process	More complex — involves multiple departments, detailed charge capture, and coordination across hospital units.	Simpler — primarily focuses on provider documentation and encounter-based coding.
Reimbursement Method	Based on Diagnosis-Related Groups (DRGs) or Ambulatory Payment Classifications (APCs). Payments are often bundled or case-based.	Based on Fee-for-Service (FFS) or Value-Based Payment Models, depending on payer contracts.
Processing Time	Usually longer — can take 30 to 90 days due to extensive claim reviews and documentation.	Typically, faster — 15 to 45 days, with fewer dependencies and simpler claim structures.
Complexity Level	High — requires cross-department coordination, detailed records, and technical coding.	Moderate — focuses on clinical documentation, coding accuracy, and compliance.
Examples of Use	Hospital stays, surgeries performed in hospital settings, emergency room visits, and inpatient treatments.	Office visits, outpatient procedures, telehealth services, and diagnostic readings.
Common Errors	Revenue code mismatches, duplicate charges, missing departmental documentation, and DRG errors.	Incorrect CPT/ICD-10 pairing, missing modifiers, insufficient documentation, and payer-specific rule errors.
Claim Submission Responsibility	Typically handled by hospital billing or centralized revenue cycle departments.	Managed by physician offices, billing companies, or third-party RCM vendors.
Purpose	Captures the cost of facility resources used during a patient’s treatment.	Captures the cost of professional judgment and expertise delivered to the patient.

Billing Forms: UB-04 vs. CMS-1500

Both forms are important to differentiate institutional claims from professional claims.

UB-04 (CMS-1450)

• Used for hospital and facility billing
• Collects institutional data (patient demographic information, revenue codes, and charges by department)
• Submitted to payers for inpatient and outpatient facility claims 
• Used primarily under Medicare Part A 

CMS-1500

• Required for professional billing associated with services performed by physicians and outpatient providers
• Collects service-specific data (CPT procedure codes, ICD-10 diagnosis codes, and provider information)
• Submitted for Medicare Part B and private insurance claims
• Used by independent practitioners, specialists, and physician groups.

The Healthcare Billing Process: From Registration to Payment

Step 1: Registration and Insurance Verification

The first step involves gathering all the important information, including patient demographics, insurance coverage, and prior authorization verification, when applicable. This step provides eligibility and helps minimize the denial of claims. 

Step 2: Charge Capture and Documentation

In the second step, each hospital department and provider completes all documentation detailing the services rendered. This documentation forms the basis for both facility and professional claims, which are then bundled for billing.

Step 3: Coding and Compliance Review

In the third step, medical coders subsequently convert documentation into CPT, ICD-10, and revenue codes. Compliance checks are performed to ensure all billing is consistent with specific CMS and other payer guidelines. 

Step 4: Claim Submission and Follow-up

In the final step, claims are then submitted electronically to the insurance company. Our billing team monitors claims denial, and if coverage continues, refiles to ensure the timely posting of payment. 

This streamlined workflow creates a faster reimbursement process, which minimizes days in accounts receivable (AR).

Common Challenges and Solutions in Hospital Billing and Professional Billing

1. Complicated Billing Structures and Various Codes

Hospital Billing: Billing by hospitals (institutional billing) involves several departments, hundreds of codes, and complicated payer rules. The billing of each service – room charges, labs, surgeries, and imaging – requires accurate documentation and coordination. There are several different code sets to contend with, including ICD-10-PCS, HCPCS, and DRGs, just to add to the complexity.

Professional Billing: Professional billing may be less intricate than institutional billing, but linking the appropriate ICD-10 diagnosis codes with the CPT codes to demonstrate medical necessity is much more difficult. If the discrepancy is not tight, it may mean immediate denials from a payer.

Solution:

Utilize coding audits and deliver management training to your billing staff. To ensure consistency when mapping CPT/ICD-10 within the billing process, use automated coding tools and integrate your RCM job process to have consistent outcomes for institutional and professional claims.

2. Claim Denials and Payment Delays

Hospital Billing: Claim denials or underpayments can be pervasive issues, particularly as it pertains to hospital billing. Claim denials, in a hospital billing context, can be caused by insufficient documentation, mis-assigned DRGs, and/or lack of pre-authorization.

Professional Billing: In the professional billing setting, denials can stem from problems such as missing modifiers, incorrect CPT codes, or inadequate encounter notes, which can create additional delays before payment is made. Research indicates that as many as 65% of denied claims are never resubmitted, resulting in significant revenue loss for the provider.

Solution:

Implement real-time claim scrubbing and denial management processes to more easily identify errors pre-contact with the payer. Engage providers to deliver standardized documentation templates and engage in regular denial trend review processes to stem potential issues from recurring.

3. Technology and Compliance Challenges

Hospital Billing: Hospitals frequently use different systems (EHR-Academic Institute, pharmacy, billing) concurrently that require integration across various systems and sometimes don’t fully integrate. This siloing results in missed charges, duplicate billing, and data inconsistency.

Professional Billing: With professional billing, while smaller (site of care, an ASC) ,you are always considering compliance risks, especially when it relates to all the federal regulations regarding documentation for claims, and protecting patient data as related to payment and billing.

Solution:

Consider moving to fully integrated EHR-RCM systems, which allow integrated workflows and compliance checking automation. Conduct regular audits of the system, use encryption protocols, and ensure secure patient data sharing to maintain the integrity of billing and to comply with federal government standards.

Conclusion

Integrating medical billing services is vital to success in healthcare billing revenue cycle management, given the facility and professional services billing challenges. Organizations must accept that billing is a complicated process, better executed when addressed through accurate documentation, compliance, and coding practices. Consistent and seamless patient billing experiences increase patient satisfaction.

If you are facing claim denials, delayed payments from your billings, or complicated billing workflows, contact our office today to schedule a consultation. Let’s make billing fast, compliant, and stress-free.

Medical billing can be a complex and lengthy process in the healthcare network. Medical practices have suffered immense losses due to denied claims. 80% of claims get denied for different reasons, like missing codes, incomplete documentation, or mismatched patient details. A superbill helps fix that problem by keeping every piece of information. 

So, what exactly is a superbill in medical billing, and how does it work?

In this guide, we will explain the entire concept of superbills, the importance of superbills for insurance reimbursement, and how healthcare providers and patients can use superbills and avoid common billing mistakes.

What is a Superbill?

A superbill is a detailed document that lists all the services provided by a healthcare provider during a patient visit, including diagnosis details and procedure codes. Superbills are typically completed and submitted each time a patient receives a treatment session with an out-of-network provider. At the end of the session, the patient pays the provider in cash for the treatment. Upon payment, the provider generates a superbill for the patient to submit to the insurance payer for reimbursement.

In some cases, the provider may also submit the superbill on behalf of the patient through electronic submission software, known as an e-superbill. An e-superbill creates a smoother patient experience with submitting claims. Regardless, the patient always pays the provider first, whether the provider or patient sends the superbill. Superbill submission is for patient reimbursement, whereas CMS 1500 forms are generally submitted to directly pay a provider.

It’s worth noting that superbills can also be called different names such as “encounter forms,” “charge slips,” “fee tickets,” or “Statement for Insurance Reimbursement.” Regardless of the title used to refer to the form, all forms of superbills documentation verify the treatment delivered so the patient can submit it to the insurance company.

 How Does a Superbill Work in Medical Billing?

A super bill consists of all the essential information that enables the insurance company to move ahead with the processing of the claim without any errors. Below is its process:

1. Diagnosis Codes (ICD-10): These codes indicate the diagnosis and condition of the patient.
2.  Procedure Codes (CPT/HCPCS): These codes show the services that were performed for the patient.
3.  Charges and Fees: The healthcare provider will indicate how much it has charged for a certain service or procedure.

The superbill is then given to the patient to submit to their insurance or sent to the insurance company directly by the provider if they are in-network. The insurance company then uses the information on the superbill to reimburse the provider for the medical services rendered.

Who Creates and Submits a Superbill for Medical Billing?

The creation and submission of a superbill usually involves the following parties:

• Healthcare Providers: The doctor/ practitioner who treats the patient creates the superbill. It verifies the diagnosis; the codes that are listed are relevant.
•  Billing Department: In larger healthcare setups, the billing department is the one that submits the superbill to the designated insurance company. This again acts as a check in the codes used.
• Patients: If the provider is an out-of-network provider, the patient themselves submits the superbill to their insurance provider.

Types of Superbills in Medical Billing

Depending on the medical practice and the services offered, there are different types of superbills. Here’s a breakdown:

Standard Superbill

Standard superbills are common in many healthcare facilities. They have all the necessary information needed for basic medical services: diagnosis codes, procedure codes, and charges needed to prepare an invoice to submit to insurance for reimbursement.

Custom Superbill

A custom superbill is designed specifically for a particular healthcare practice. It might include unique codes and charges that are relevant to the provider’s specialty, making the process more structured and efficient.

Specialty Specific Superbill

Some medical fields require specialty-specific superbills that are custom to include codes and services specific to your specialty (i.e., dermatology, chiropractic, mental health). This helps in ensuring that procedures/diagnoses are captured correctly for billing.

Electronic Superbills (e-Superbill)

With health care technology expanding, many providers are using electronic superbills (e-superbills), which are superbills submitted directly via an EHR system, rather than printed on paper. This digital process improves efficiency, reduces paperwork, and supports better Healthcare RCM performance across practices.

3 Main Components of a Superbill

Component #1: Provider Information

The provider information section includes all relevant details about the healthcare provider that provided the services. This information identifies the practice responsible for the medical treatment and ensures the administrative billing process is performed accurately and completed by the appropriate provider. Provider information typically contains:

• Provider NPI number
• Office location
• Provider phone number and email
• Provider signature
• Referring provider name and NPI number (if known)

Caution: Errors and omissions in this section will affect claims processing and the payment of services rendered. 

Component #2: Patient Information

The patient information section contains critical and identifying information to ensure that the claim is accurately associated with the appropriate individual. This information is also used to confirm insurance coverage as the claim proceeds through adjudication for reimbursement. The primary components of the patient information area may include:

• Patient’s First and Last Name
•  Patient’s Address and Phone Number
• Patient’s Date of Birth (DOB)
• Patient’s Insurance Information

Component #3: Visit Information

The visit information section is likely the most functionally significant part of a superbill, as it lists the detailed medical encounter. The accuracy of this component is critical to avoid billing errors and claim denials that may come at a financial cost to the provider and patient. In the visit information components, it is important to accurately list the following details:

•  Date of Visit
•  Procedure Codes and Descriptions (CPT)
• Diagnosis Codes and Descriptions (ICD-10)
•  Modifiers 
•  Units or Minutes
•  Fees Charged

Since visit information is often very detailed and has complicated elements, it is important to manage this part of the superbill cautiously. Medical coding companies, which follow the coding guidelines for ICD-10 and CPT codes, are frequently provided for this purpose to ensure codes are correct and compliant. Doing so decreases the risk of errors and denials of claims.

Step-by-Step Guide to Create a Superbill

1. Patient Information: Enter the patient’s basic information, such as name, date of birth, and insurance company.
2. Diagnosis Codes: Apply the appropriate ICD-10 codes based on the diagnosis of the conditions during the visit.
3. Procedure Codes: Refer to the CPT or HCPCS codes based on what was completed.
4. Add Charges: Add the cost of each service completed at that visit.
5. Review: Verify everything is correct and complete so that there will be no hold on the claim processing.

Having a superbill template, you can easily complete your superbill and concentrate on what’s not filled.

Pros & Cons of a Superbill in Medical Billing

Superbills provide numerous advantages, but they may also present problems. Below is a brief overview of the benefits and challenges:

Pros	Cons
Simplifies the Process: Superbills help with insurance claims submission by including all the information a health insurance company requires in a single document.	Complicated for Patients: For out-of-network services, patients may find it challenging to understand how to use a superbill to submit a claim.
Minimizes Mistakes: By standardizing the data needed for a claim, superbills minimize the risk of missing information or coding mistakes or errors.	Administrative Costs: The administrative time to generate superbills can be time-consuming, especially for large practices.
Quicker Payments: When insurance claims submission includes accurate and succinct information, it allows health insurance companies to process the claims faster.	Coding Errors: Errors in the coding may cause a claim to be denied and can cause a delay for payment.

Superbill vs Invoice: What’s the Difference?

 Superbill: To request reimbursement from insurance companies, it also includes diagnosis and procedure codes required for claim processing.

 Invoice: A bill issued to the patient for services rendered, showing the total cost of treatment or products, typically without any coding for insurance submission.

Use Superbills to Improve Accuracy for Faster Reimbursement

A superbill in medical billing is a critical document for healthcare providers and patients. They are used to organize the claims process, ensure accurate billing, and speed up insurance reimbursement.

By using a customized superbill, or electronic superbill, healthcare providers can effectively strengthen their practice’s operational efficiency and decrease the chances of billing errors that could cost heavy monetary losses. Working with medical billing services can further streamline this process and improve reimbursement rates.

FAQs

How do I create a superbill?

When creating a superbill, the main things you will want to do are gather the patient information, the diagnosis and procedure code, the charges, and make sure the information is all correct.

Does a Superbill need to be signed?

There are no requirements (other than office policy) to require a physician’s signature, so the primary function of a superbill is to allow the provider to communicate to the office staff what services were provided and why they were necessary (and, by extension, the office staff to communicate to the payer). 

Are there different types of superbills?

Yes, there are standard superbills, custom superbills, specialty-focused superbills, and electronic superbills, each serving its own purposes based on the needs of the practice.

Does a Superbill need to be signed?

There are no requirements (other than office policy) to require a signature from the billing physician, so really the primary purpose of a superbill is to simply allow the provider to communicate to the office staff what services they provided to the patient, and why they were necessary (and in turn that allows the office staff to communicate to the payer).