Importance of types and differences in Medical Billing

Medical billing is the process of producing and submitting health insurance claims. Importance of types and differences in Medical Billing outsourced organizations  provide these services on the behalf of the providers Outsourced organizations  provide these services on the behalf of the providers.


Medical billing/bills can be divided into two categories:

  • Professional billing
  • Institutional billing

Let’s take a look at both Types of Medical Billing

Professional Billing

Professional Billing

Doctors and physicians use this category more often. The service providers or specialists are expected to be experienced in all aspects of both the billing and coding systems.

  • The procedure of professional billing is accomplished on the CMS-1500 Forms.
  • Form 837-P is its electronic version.
  • The electronic claim filling is supposed to be only the primary step of the process initiation, paperwork is still compulsory.
  • The documentation is a very critical step.
  • The professional knowledge of all the terms and conditions is crucial to pursuing professional medical billing.


Institutional Billing 


Institutional billing deals with the institutes such as hospitals, rehabilitation centers, clinics, and nursing homes, etc. It deals with all the casualties i.e., apparatus, laboratory facilities, and radiology services, etc.

  • Form UB-04 is used in the process of institutional billing, form 837-I is its electronic version.
  • Institutional billing focuses mainly on billing and collections.
  • Coding is the job kept for professional medical coders.
  • The coding is complex as compared to the professional billing services, that’s why only a professional can do it.


Types of Medical Billing systems

Importance of types and differences in Medical Billing systems have become a very large part of the healthcare system. It takes care of many things such as best patient care practices, healthcare institution regulations, insurance claims, and much more. The three main types of medical billing systems are:

  • Closed
  • Open
  • Isolated


  • Transfers are not allowed in the closed medical billing system.
  • It only involves individual practices.
  • The use of EMR or Electronic Medical Records in the physicians’ practice falls under the category of closed medical billing services.
  • Partnership with other physicians and healthcare services such as laboratories or urgent care is not allowed.


  • The open medical billing system deals with transfers.
  • The transfer between doctors, healthcare providers, their practices and services are allowed.
  • Electronic Health Records or EHRs are the biggest examples of open medical billing services.
  • The substitution between EMR and EHR is also possible but EHR are more common and practiced.
  • There are more efficient and accurate.
  • Medical billing software such as AllMeds, McKesson, AdvacedMD and GE Centricity etc. always have to be ready to communicate and collaborate every time in open medical billing services.
  • Not every software uses the open system for patient privacy and to hold the record private and confidential to the company.


  • The isolated medical billing system is totally uninvolved with healthcare services, doctors, and their practices. 
  • Personal Health Records or PHRs is the system used in isolated billings.
  • All the documentation and records are held and managed by the patients or clients.
  • However, they are unconnected and do not substitute for EMRs or EHRs.
  • It only helps the patient to keep tabs on his own health care management.
  • They do not officially replace authorized healthcare records and is not a common practice.
  • It involves direct communication among the software for error-free transfer.

Every system has its advantages and disadvantages. The choice of documentation and medical billing software plays a huge role in the selection of the right medical billing system. Knowledge of Medical Billing and coding rules is also very important and plays a very important role to get minimum rejected claims.

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