If you’re working in healthcare billing, understanding the difference between professional claims and institutional claims is essential. Though they sound similar, these two claim types cover very different billing processes. Professional claims come from individual healthcare providers like doctors, therapists, or nurses, typically billing for outpatient services in private practices or clinics. In contrast, institutional claims are submitted by facilities such as hospitals, rehab centers, or nursing homes. These claims cover charges for room use, equipment, and multiple services provided within the facility. Knowing when to use each claim type helps avoid costly delays, reduces denials, and keeps your practice running smoothly.

We specialize in helping healthcare providers navigate the complex world of medical billing. Whether you’re submitting professional claims or handling institutional claims, our expert team ensures your claims are accurate and compliant. This means faster payments and less hassle for you. In this guide, we’ll walk you through the key differences between professional and institutional claims, explain how each is used, and share tips on streamlining your billing process. With SRG by your side, billing becomes simpler, so you can focus on providing great patient care.

What Is a Professional Claim?

A professional claim is submitted by individual healthcare providers. This includes physicians, nurse practitioners, physician assistants, and therapists. If the service is rendered by a person, not a facility it’s considered professional. These claims are submitted using the CMS-1500 form, also known as the HCFA-1500. This red and white paper form (or its electronic version) is the standard for outpatient, office-based, and non-facility services.

Who Submits Professional Claims?

• Private practices
• Outpatient clinics
• Independent diagnostic testing facilities
• Durable Medical Equipment (DME) providers
• Any individual provider billing for their own services

What Services Are Billed?

Professional claims cover services like

• Office visits
• Preventive care
• Diagnostic testing (e.g., labs, imaging)
• Mental health therapy
• Minor procedures

The focus is on the work performed by a healthcare professional. It includes CPT/HCPCS codes for services and ICD-10 codes for diagnoses.

What Is an Institutional Claim?

Institutional claims are submitted by facilities. These include hospitals, skilled nursing facilities, rehab centers, and more. The form used is the UB-04 (also known as CMS-1450). Instead of individual services, institutional claims cover the broader cost of care provided by a facility. This could include room charges, surgeries, lab work, radiology, nursing services, and more.

Who Submits Institutional Claims?

• Hospitals (inpatient and outpatient)
• Skilled nursing facilities (SNFs)
• Home health agencies
• Rehab centers
• Hospice organizations

What Services Are Billed?

Institutional claims include:

• Inpatient stays
• Emergency room visits
• Operating room charges
• Laboratory services
• Radiology
• Facility fees

They often include revenue codes, value codes, and condition codes in addition to CPT/HCPCS and ICD-10 codes.

Key Differences Between Professional and Institutional Claims:

In medical billing, claims are typically categorized as either professional or institutional, depending on the type of service provided and the setting in which it was delivered. Understanding the distinction between these two claim types is crucial for accurate billing and timely reimbursement. To help you see the differences clearly, here’s a side-by-side comparison:

Why Does the Difference Between Professional and Institutional Claims Matter?

Using the wrong claim type in medical billing can lead to costly denials and slow down your payments. It’s that simple. For example, if you submit a UB-04 form (used for institutional claims) for a routine physician office visit, the payer will almost always reject it. On the flip side, trying to bill a hospital stay using a CMS-1500 form (meant for professional claims) won’t work either. These forms and claims are designed for very different purposes, and mixing them up causes confusion and delays.

Knowing the difference between professional and institutional claims helps you avoid common billing errors. Using the correct claim type leads to fewer denials, faster reimbursement, and more accurate revenue reporting. It also keeps your billing compliant with insurance and payer rules. At SRG, we make sure your claims are properly prepared and submitted to speed up your payments and reduce administrative headaches. Getting it right the first time means your healthcare practice runs smoother and your cash flow stays healthy

Common Errors to Avoid in Professional vs. Institutional Claims:

Even experienced medical billers can slip up when handling professional claims and institutional claims. Avoiding these common mistakes helps keep your medical billing clean and efficient:

1. Using the Wrong Form: Always use the correct claim form for your provider type. A private practice should submit claims on the CMS-1500 form, while hospitals and facilities must use the UB-04 form. Using the wrong form can trigger automatic denials.
2. Incorrect Code Combinations: Institutional claims often require additional codes, like revenue codes and condition codes, that professional claims do not. Missing or mixing these codes can cause confusion and claim rejections.
3. Confusing Place of Service (POS) Codes: The POS code must align with the claim type. For instance, POS 11 is for office visits and fitting professional claims, while POS 21 refers to inpatient hospital settings, linked to institutional claims. Using the wrong POS code can delay payment.
4. Not Linking Services to the Correct Provider: Professional claims need to clearly identify the rendering provider’s NPI (National Provider Identifier). In contrast, institutional claims generally link services to the facility’s NPI. Misidentifying providers can cause claim denials or payment delays.

Reimbursement Impacts

Reimbursement for professional claims and institutional claims varies widely and impacts your cash flow. Professional claims typically follow the Medicare Physician Fee Schedule or similar fee-for-service models, where providers are paid for each specific service rendered, like office visits or procedures. In contrast, institutional claims are often reimbursed using Diagnosis-Related Groups (DRGs), per diem rates, or bundled payment models, which pay hospitals based on the overall care episode or patient stay rather than individual services. Understanding these differences is crucial for accurate medical billing reimbursement and faster payment.

Submitting the wrong claim type or mismatching the reimbursement model can lead to costly delays and denied payments. Payment delays can last weeks or even months, hurting your practice’s financial health.

Get Faster Reimbursements By Outsourcing Your Medical Billing Services to SRG

At Surplus Revenue Group, we specialize in simplifying the complexities of professional and institutional medical billing so you can focus on patient care. Whether you’re a solo provider or a large healthcare facility, our experienced billing team ensures every claim, professional or institutional, is submitted accurately and in compliance with payer rules. We verify forms, review codes, track denial trends, and keep your team updated on billing changes. This helps reduce denials, speed up reimbursement, and protect your revenue. If you’ve ever been unsure whether to use a CMS-1500 or UB-04, or struggled with coding or payer-specific rules, We have you covered. Partner with us to optimize your medical billing process, improve cash flow, and stay ahead in today’s ever-changing healthcare landscape. Contact us today and experience billing support that’s accurate, timely, and tailored to your needs.