What is the difference between physician billing and facility billing?

Physician billing covers professional services billed on the CMS-1500 under the physician’s individual NPI. Facility billing covers overhead costs billed on the UB-04 under the facility NPI. A hospital outpatient visit generates two separate claims: one from the physician for the professional fee and one from the hospital for the facility fee. Physicians working in hospital settings must use the correct place-of-service code or risk paying the wrong fee schedule rate.

What CPT codes are used in physician billing?

Physician billing uses CPT codes to describe services, with E/M codes being the most commonly used category: 99202 to 99215 for office visits, 99221 to 99233 for inpatient visits. Procedure codes, diagnostic codes, and add-on codes are also used depending on the specialty. Each CPT code must be supported by clinical documentation matching the level of service billed. Selecting a code not supported by the documentation is either an undercoding or overcoding error.

Why do physician billing claims get denied?

The most common denial causes in physician billing are incorrect patient demographics, missing prior authorization, CPT codes that don’t match the diagnosis, modifier errors, billing under a non-enrolled physician NPI, duplicate submissions, and timely filing violations. Most denials are preventable with a front-end process that catches eligibility and authorization issues before the visit and a coding review process that catches errors before the claim is submitted.

What is the CMS-1500 form used in physician billing?

The CMS-1500 is the standard claim form for physician billing. It captures patient insurance information, rendering provider NPI and credentials, service date, place of service, CPT codes, ICD-10 diagnosis codes, and modifiers. Errors on any field cause the claim to fail payer edits. Electronic submission of the CMS-1500 through a clearinghouse is the standard method; paper submission is slower and subject to manual entry errors on the payer’s side.

What is a place of service code in physician billing?

A place of service code identifies where the physician delivered the service and directly affects reimbursement rates. Office is POS 11, outpatient hospital is POS 22, inpatient hospital is POS 21, and telehealth uses POS 02 or 10 depending on the payer and service type. Medicare pays different fee schedule rates depending on the setting because facility-based settings receive a separate facility payment. Using the wrong POS code produces either an underpayment or a recoupment request during audit.

What KPIs should a physician practice track for billing performance?

The five core physician billing KPIs are clean claim rate (target 95% or higher), first-pass acceptance rate (target 95% or higher), days in AR (target under 40), denial rate (target under 5%), and net collection rate (target 95% or higher). All five together give a complete picture of revenue cycle health. Days in AR is the most useful single metric because it reflects the cumulative effect of every upstream process stage and immediately signals when something in the cycle is broken.

Should a physician practice outsource billing?

Outsourcing physician billing makes sense for most practices because specialized billing teams consistently achieve higher clean claim rates, lower denial rates, and shorter AR cycles than in-house teams without dedicated billing expertise. The cost comparison often favors outsourcing too: staff salaries, software, compliance training, and denial management capacity combined typically exceed the cost of a billing partner. The performance gap between a specialist billing team and a generalist in-house operation is where the real financial argument lives.

What Is Physician Billing and Why Most Practices Are Losing Revenue Without Knowing It

Q: What is physician billing?

Physician billing is the process of submitting claims to insurance payers for professional services rendered by a licensed physician, using the CMS-1500 claim form, CPT procedure codes, and ICD-10 diagnosis codes billed under the physician’s individual NPI. It covers the full cycle from patient registration and eligibility verification through coding, claim submission, payment posting, denial management, and AR follow-up. Every stage affects what the practice ultimately collects.

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What Is Physician Billing and Why Most Practices Are Losing Revenue Without Knowing It