Differences in Billing for Private vs. Hospital-Owned Practices

In the last two years, many cardiologists have been moving into hospital employment.  With this change, billing practices may change significantly or they may change very little.  The following is a review of how Medicare payment works for the private practice as well as how it may change for those in hospital employment.

Private Practice

A physician-owned practice bills for services under the physician fee schedule (PFS).  The PFS is based on relative value units (RVUs) for the more than 7,000 available CPT and HCPCS codes.  Payments are adjusted for the geographic region where the service is provided.  Some services, such as imaging, may be billed with modifiers that indicate that only a component of the service was provided. 

A service like this is divided into professional and technical components.  The professional component essentially covers the mental and physical work directly provided by the physician.  The technical component covers the equipment (i.e. ultrasound machine), supplies (i.e. ultrasound transmission gel), and clinical staff (i.e. cardiac sonographer). 
If a physician performs only the professional component – for example reading an echocardiogram for a primary care practice – it would bill for the professional component using the 26 modifier. 

If a practice performs only the technical component then it would bill for the technical component using a TC modifier. 
If both components were provided, then no modifier is required and both components are paid.  As you’ll see below, the global service payment always adds up to the sum of the technical and professional component. 


Professional (26)

Technical (TC)


93306 (rest echo)




Hospital-Owned Practice

Hospital-owned practices may bill using the above method.  Practices that are less integrated into the structure of the hospital are likely to continue to bill this way.  However, those that have become tightly integrated will often bill using a different method billing under both the physician fee schedule and the hospital outpatient prospective payment system (HOPPS). 

HOPPS pays for all services provided by a hospital for patients that are not actually admitted to that hospital including diagnostic tests, emergency room visits, and observation stays.  A physician practice owned by a hospital may bill under HOPPS if it meets certain requirements for geographic proximity and clinical and financial integration, and meets certain hospital conditions of participation related to safety and emergency care.

Billing under HOPPS requires the completion of detailed cost reports that capture the resources consumed for the service.  Although there is more packaging and bundling in HOPPS than in PFS, it is essentially a fee-for-service system and in most cases the same CPT codes are reported. 

A practice billing under HOPPS would bill the professional component (explained above) under the PFS and also submit a bill to HOPPS for the same service.  Some services such as office visits do not have a technical and professional component split.  In those cases, the payment for the service submitted to the physician fee schedule is adjusted to reflect that it was provided in a “facility” setting.  For example, a mid-level office visit (CPT code 99213) is paid $70.49 outside of a “facility” and $49.69 in the “facility”.  However, the hospital-owned group practice would submit a bill to HOPPS for which it would be paid $72.19 – meaning that the total payment to the hospital-owned group is $121.88.

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