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Question: What鈥檚 the difference between self-pay, insured, and institutional billing?

Kansas Subscriber

Answer: A patient who receives services from a provider may get several bills, depending on the service performed and where it was provided. The two main categories are professional billing (reflecting costs incurred for services provided) and institutional billing (reflecting costs incurred by a facility). Generally, professional billing involves two categories of patients: self-pay and insured; both can involve diagnosis codes, usually using ICD-10-CM conventions, and procedure and service codes like CPT^庐, including evaluation and management (E/M) codes.

Self-pay billing: Patients who are self-pay do not have health insurance and pay out-of-pocket for the services they receive. Many times, hospital systems or other healthcare organizations have a standard discount they apply to self-pay patients, and billing departments work with self-pay patients before services are provided to help them understand their financial responsibilities. The No Surprises Act has certain requirements for organizations to follow regarding patient financial obligations, including providing good faith estimates.

Insured billing: When providers see insured patients, their practices generally bill the insurance carrier for the cost of the services and then get in touch with patients to cover any remaining costs. While insured patients may be responsible for a copay, deductible, or coinsurance upfront, practices also work with insurance carriers to seek reimbursement for services rendered. Billing for services provided to insured patients usually involves CPT^庐 codes or the Medicare equivalent.

Institutional billing: Also known as facility billing, institutional billing uses certain coding conventions like HCPCS or and the diagnosis related groups (DRG) categorization system designated by the Centers for Medicare & Medicaid Services (CMS) to evaluate costs and payments. 

Rachel Dorrell, MA, MS, CPC-A, CPPM, Development Editor, AAPC