What is billing?

A process used by various vendors to request the customers for payments is known as billing. It helps to get the prices from the customers. It keeps the record of the buying and selling transactions of the business organization and service sector.

What is hospital billing?

A process where a hospital takes the billing amount of the customers from the insurance company rather than the customers is known as hospital billing. It is an agreement between the payer and provider for the hospital billing. It improves the regulations and services of the healthcare industry.

Requirements for the hospital billing

The image shows the requirements for hospital billing. These are patient health services, patient financial responsibility, billing requirement and reimbursement.
Requirement for hospital billing
  • Hospital billing requires patient health services provided by different hospitals. It includes the room and bed facility, Medicare services, therapy, physical therapy, dental care, etc.
  • Hospital billing also makes the patient’s financial situation easy to claim reimbursement.
  • Billing requirements include complete information about the patient to follow proper hospital billing procedures.
  • Reimbursement is when the payer and provider come together to claim payment for the patient bill and reimburse it.

Advantages of hospital billing

  • Eliminates billing errors: Hospital billing helps to avoid the billing errors of the patients and maintain transparency in the payment procedure. It provides a complete and clear billing payment process with complete information and healthcare services provided to the patient in the hospital.
  • Focus on patient healthcare: The main aim of hospital billing is to focus on the Medicare and pharmaceutical services that should be beneficial to the patients. It provides physical, mental, and financial help and support to the patients.
  • Accelerate cash flow: The hospital billing helps to claim and reimburse the healthcare and Medicare expenses from the insurance company. It results in cash flow in the hospitals and provides financial support to the patients.
  • Patient satisfaction: It provides satisfaction to the customers. The payer helps the parties to clear the hospital billings, and a provider is a person who provides medical services to the patients.
  • Growth of the healthcare industry: Medicare facilities, hospital, and medical billing, health insurance facilities, bill reimbursement services, etc. help accelerate the growth and development of the healthcare industry in the market.
  • Patient engagement: Building a cordial relationship with the patients increases the chances of recovery. Communication and engagements with the help of the hospital billing help to cure the patients fast.

Disadvantages of hospital billing

  • Incorrect patient information: Hospital billing sometimes inserts incorrect information about the patients. Sometimes the name is changed, services given to the patient are not mentioned, inaccurate amounts and numbers, etc.
  • Double charges: Many hospital employees or the team who looks after the hospital billing process take undue advantage for their personal benefits. They record double entries for a single service and increase the bill amount for personal gain.
  • Lack of proper services: Sometimes, good services are not rendered by the healthcare department and hospitals. It affects the process of billing.

Purpose of hospital billing

  • Claims for in-patient services: A medical service that requires a patient to stay in the hospital overnight or for a certain time period, is known as in-patient service. It includes the services which take more time. It includes the usage of the emergency room, therapy services, beds, equipment, surgery, short-term Medicare services, acute healthcare services, etc.
  • Claims for out-patient services: A medical service in which the patient does not take medical treatment by staying in the hospital overnight is known as out-patient services. It includes services such as healthcare counseling, diagnostic services, MRI, chemotherapy, etc.

Process of hospital billing

Process of hospital billing

The patients should adequately follow the hospital billing process for an effective billing process system, management of bulk billing, and payment.

  • Registration of patient: The first step is to register the patient who has taken healthcare services from the provider. The registration process includes registering the complete information about the patient such as name, occupation, age, date, healthcare problems, signature, etc.
  • Analyzing the patient's financial situation: The next step is identifying, analyzing, and evaluating the patient's financial situation. It helps to know the provider whether the patient is liable to pay the healthcare debts or not. It also identifies the type of healthcare insurance patients have which makes it easy to prepare the bill.
  • Bill creation: The actual creation of the bill starts from the third step. All the information related to the patient is filled in the bill. It also includes detailed information about the services provided to the patient, the number of days the patient was in the hospital, the expense amount, etc. It facilitates bill payment.
  • Generating and submitting a claim: After filling in all the billing information, the software generates the bill that is then submitted to the concerned insurance organization from the provider organization.
  • Claim statement preparation: It includes a statement that the provider organization creates to claim the hospital billing of the patients from the payer organization. It helps to get the reimbursement of the hospital billing of the patient.
  • Follow-up: The last step is the follow-up procedure that helps in quick reimbursement of the bill. The hospital billing process should be properly developed so that payer can easily understand it and reimburse the payment.

Medicare billing

Billing-related to the Medicare services provided to the patient by the provider organizations is known as Medicare billing. The hospital that provides the Medicare services submits the patient’s bill to the Medicare department payer and gets the reimbursement of the bill. The amount of refund is equal to the amount approved under Medicare.

Health insurance

An insurance policy that provides medical help and support to the patient is known as the health insurance policy. The insurance company helps the patient to cover their medical and billing expenses. It provides financial, physical, and mental help to the patient. Mediclaim coverage, individual health insurance, senior citizen insurance policy, etc., are different types of health insurance.


  • It is a public insurance policy that provides healthcare benefits to people in the low-income group.
  • It provides Medicare and health services to citizens who are financially weak.
  • It provides healthcare facilities to women, children, senior citizens, men, pregnant women, and people with mental disorders.
  • It acts as a payer and provides medical and health care benefits to the patient.

Methods of reimbursement

The image shows the five methods of reimbursement. These are discount facilities, bundle payment, fees, value based reimbursement, and shared services.
Methods of reimbursement
  • The discount facility on billed amounts: This provides discounts on the medical billed amounts of the patients. It helps to reduce the risk of non-payment by the payer. Hence, it helps to save money which can be used for a different purpose.
  • Bundle payment: This method of reimbursement helps to coordinate all the expenses of the patient. It helps to minimize unnecessary medical services that are provided to the patients. Hence, it also helps to reduce unnecessary costs and medical expenses.
  • Fees-for-services: It is a method of negotiating the fees charged for the services rendered by the provider to the patients. This reimbursement method helps to control and manage medical costs, overtime medical services, etc.
  • Value-based reimbursement: This method focuses more on the quality of the patients’ services rather than the quantity of Medicare services. The services provided to the customers must show positive results and increase the rate of recovery of patients.
  • Shared savings: It provides reimbursement for the combined services provided to the patients. It helps to provide more incentives and reduces the risk to facilitate the efficiency and positive outcomes of the patients.

Common Mistakes

Students do not have a clear idea about the hospital billings. They are unclear about the billing process, reimbursement, and payment settlement. They should learn the concepts such as Medicaid, Medicare, health insurance, etc.

While studying this topic, it is essential to read the following topics to get a better knowledge:

  • Health insurance- This topic covers the details related to insuring one's health.
  • Reimbursement process- This process covers the various sources available for claiming an insurance reimbursement.
  • Medicare services- This topic deals with the facilities available to citizens under the State Medicare.
  • Medicaid- This topic covers the state-sponsored Medicaid facility at length.

Context and Applications

This topic is significant in the professional exams for both undergraduate courses & postgraduate courses and competitive exams, especially for:

  • Bachelors in Nursing
  • Bachelors in Hospital Administration
  • Masters in Hospital Administration

Practice Problems

Q1: Identify which of the following is related to hospital billing.

a. Financial support

b. Goods distribution

c. Lack of healthcare services.

d. Lack of attention to the patient.

Answer: a

Explanation: Goods distribution, lack of healthcare services, and lack of attention to patients are concerned with logistics, political issues, and hospital services. Financial support is related to hospital billing as it concerns the financial position of the patient and any help that he needs for settling the bill.

Q2: Identify which of the following is an in-patient service.

a. Overnight hospital services

b. Lack of health services

c. Poor financial support

d. Short-term health services.

Answer: a

Explanation: In-patient services refer to medical services that require the patient to stay in the hospital for more than 24 hours. So, overnight hospital services can be categorized as in-patient services.

Q3: Identify which of the following is not an outpatient service.

a. Wellness services

b. Preventive services

c. Long-term health services

d. Diagnosis

Answer: c

Explanation: Outpatient service refers to services that do not require the patient to stay in the hospital overnight. So, long-term health services are categorized as outpatient services.

Q4: Identify which of the following bill is paid by the Medicare department.

a. Purchasing bill

b. Selling bill

c. Medicaid bill

d. Entertainment bill.

Answer: c

Explanation: The government set up the Medicare department to specifically cover Medicaid bills.

Q5: Identify which of the following benefit is provided by Medicaid.

a. Healthcare benefits

b. Entertainment benefits

c. Travel services

d. Educational facilities

Answer: a

Explanation: Medicaid is a federal program that takes care of the medical needs of the people enrolled in this program.

Want more help with your finance homework?

We've got you covered with step-by-step solutions to millions of textbook problems, subject matter experts on standby 24/7 when you're stumped, and more.
Check out a sample finance Q&A solution here!

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.

Search. Solve. Succeed!

Study smarter access to millions of step-by step textbook solutions, our Q&A library, and AI powered Math Solver. Plus, you get 30 questions to ask an expert each month.

Tagged in


Medical Insurance

Hospital Billing and Reimbursement

Hospital Billing and Reimbursement Homework Questions from Fellow Students

Browse our recently answered Hospital Billing and Reimbursement homework questions.

Search. Solve. Succeed!

Study smarter access to millions of step-by step textbook solutions, our Q&A library, and AI powered Math Solver. Plus, you get 30 questions to ask an expert each month.

Tagged in


Medical Insurance

Hospital Billing and Reimbursement