Healthcare billing in the United States relies on a complex system of standardized claim types for reimbursement. A facility claim is a specific request for payment submitted to an insurance payer (such as Medicare, Medicaid, or a private company). This claim represents charges associated with the physical location and its resources, rather than the individual medical expertise of the practitioner.
The Scope of Institutional Billing
A facility claim, often called an institutional claim, is the formal request for payment covering the operational expenses of a healthcare establishment. Institutions submit these claims to secure reimbursement for the infrastructure and support services provided during patient care. The claim covers costs such as medical equipment, supplies, medications, nursing care, and physical space overhead.
Entities submitting facility claims include hospitals (for inpatient and outpatient services), ambulatory surgery centers, skilled nursing facilities, hospice organizations, and emergency departments. Any licensed medical setting providing the physical location and resources for treatment uses this billing mechanism. The charges reflect the facility’s cost of readiness and operation.
Comparing Facility Claims and Professional Claims
The healthcare billing system separates charges into two primary categories: facility claims and professional claims, which are often billed separately for a single episode of care. The key difference lies in who submits the claim and what is being billed. Facility claims cover the physical resources and overhead required to deliver care, submitted by the institution.
In contrast, professional claims are submitted by the individual provider or physician group, covering the clinician’s specific services. This includes the physician’s time, expertise, surgical skill, and the interpretation of diagnostic tests. Professional claims rely on Current Procedural Terminology (CPT) codes to describe the exact service performed.
Facility claims use Revenue Codes to categorize the type of service or department where care was delivered (e.g., the emergency room). For example, a surgery requires a professional claim for the surgeon’s time and a separate facility claim for the operating room, supplies, and recovery area.
Standardized Claim Submission Requirements
Facility claims must adhere to strict submission standards to ensure efficient processing by all payers. The standardized mechanism for submitting these claims is the UB-04 form, officially known as the Centers for Medicare & Medicaid Services (CMS) Form 1450. This form is used by institutional providers to submit claims for both inpatient and outpatient services to government and commercial insurers.
The UB-04 form standardizes the data elements across the industry, which is a requirement under the Health Insurance Portability and Accountability Act (HIPAA) for electronic transactions. Crucially, the form requires the use of Revenue Codes, which are three- or four-digit codes that identify the specific department or service that generated the charge. These codes are used in conjunction with diagnosis codes (from the ICD-10 system) and procedural codes to provide a complete picture of the patient’s visit and the resources utilized.
While the physical UB-04 form is used for paper claims, the vast majority of facility claims are submitted electronically using the 837I transaction set, which mirrors the UB-04’s structure. The National Uniform Billing Committee (NUBC) oversees the maintenance of this standard, ensuring that all necessary information is consistently reported for accurate reimbursement.
How Facility Claims Affect Patient Costs
Facility claims significantly impact the total amount a patient owes, primarily through facility fees. When a service is provided in a hospital-owned setting, the facility claim includes these fees to cover the institution’s high operational costs. Consequently, a patient often receives two separate bills for a single visit: one from the facility for overhead and resources, and one from the provider for professional services.
The facility fee can trigger a separate deductible or co-payment, distinct from the professional fee. If a hospital system acquires a physician’s office, that office may begin billing as a hospital outpatient department, adding a facility fee to routine visits. This means the overall cost for the exact same service can be substantially higher simply due to the billing location.
A patient’s financial liability is also affected by whether the facility is in-network with their insurance plan. An out-of-network facility status can lead to higher out-of-pocket costs, even if the individual physician is in-network. Facility fees are a growing concern due to their lack of transparency and the potential for unexpectedly high charges.