Hospital billing: what it is, how it works and how to improve it

Hospital billing is the process that turns every service provided into revenue for the hospital. It seems simple, but between the moment the patient is discharged and the time payment comes in, there is a complex path, full of rules, codes, deadlines and points of failure.

Behind this process are two professional profiles that sustain the revenue cycle: the hospital billing specialist, responsible for organizing and submitting claims, and the nurse auditor, who reviews the clinical content before the claim reaches the payer. Understanding what each one does, and how they complement each other, is essential to structuring billing that actually works.

What is hospital billing?

Hospital billing is the administrative and financial process that converts the services provided by the hospital into formal charges to health plans. It covers the recording of procedures, tests, consultations, medications, materials and hospital stays, and turns those records into a structured, coded hospital claim submitted for payment.

The process does not begin when the claim is submitted but at patient registration, and it runs through the entire care journey until payment and financial reconciliation. Any failure along this path compromises the amount the hospital is entitled to receive.

How hospital billing works

Hospital billing follows a flow that begins even before care is provided and ends only after the payer’s payment. This flow is known as the hospital revenue cycle. A failure in any one of them can result in a denial or a delay in payment.

1. Pre-service

Patient registration, health plan eligibility check and request for prior authorization (when required). Errors at this stage, such as incorrect registration data or expired authorization codes, generate administrative denials that could be avoided with an upfront check.

2. Care documentation

Physicians, nurses and other professionals record in the electronic medical record the procedures performed, the medications prescribed and the materials used. The quality of this record directly determines what can be billed: items that are not recorded cannot be charged, and incomplete records lead to disputes.

3. Coding

Care records are translated into standardized codes from the official tables: TUSS for procedures and services, CBHPM for physician fees, Brasíndice and SIMPRO for medications and materials. Coding discrepancies are among the most frequent causes of technical denials.

4. Medical claim assembly

All items are organized into a single claim, checked by the internal audit team before submission. This stage includes verifying compatibility between the diagnosis, the procedures and the materials charged, as well as checking each payer’s contractual deadlines.

5. Submission via TISS

The claim is transmitted to payers in the TISS format (Supplementary Health Information Exchange), the electronic standard required by ANS (Brazil’s National Supplementary Health Agency). The payer’s acceptance of the XML is the first indicator that the claim is technically correct.

6. Payer audit and payment

The payer reviews the claim and may apply denials or request additional documentation. Once it approves the claim, it makes the payment. The average time to payment jumped from 60 to 70 days to 120 days in 2024, according to Anahp (National Association of Private Hospitals), with a direct impact on institutions’ cash flow.

7. Reconciliation and denial management

The hospital checks the amounts received against the amounts billed, identifies the denials applied and decides which ones to contest through a denial appeal. This stage closes the cycle and feeds the indicators for continuous process improvement.

Who takes part in hospital billing?

Hospital billing is a multidisciplinary activity. Every area contributes, and every integration failure between them generates financial loss.

What does a hospital billing specialist do?

The billing specialist organizes, codes and submits claims to payers within contractual deadlines and rules. Their core responsibilities include:

• Coding procedures, tests and treatments according to the reference tables: TUSS, CBHPM or SUS (Brazil’s public health system), depending on the type of contract.

• Checking prior authorizations for the services performed and making sure they are valid at the time of billing.

• Checking and correcting information before the XML is submitted, identifying inconsistencies that could lead to technical or administrative denials.

• Keeping constantly up to date on contracts, coverage rules and the particularities of each contracted payer.

• Making sure all charges are submitted within the established deadlines, preserving the hospital’s cash flow.

What does a nurse auditor do?

The nurse auditor performs a technical review of hospital claims to make sure the procedures charged match what was actually performed and recorded. The role requires a nursing degree and, in general, a specialization in healthcare services auditing. Their main responsibilities are:

• Verifying that the procedures performed are documented in the patient’s medical record, with clinical documentation consistent with the charge.

• Ensuring the services provided comply with technical standards, clinical protocols and the contracts signed with payers.

• Identifying inconsistencies: charges without clinical support, failures in recording materials and medications, or mismatches between diagnosis and procedure.

• Working to prevent clinical denials by guiding care teams on the documentation requirements of each payer.

• Taking part in concurrent audits, reviewing the claim during the hospital stay, before closing, to correct deviations in real time.

How the two complement each other in the revenue cycle

In general, the nurse auditor works before and during claim closing, validating the clinical content. The billing specialist works at closing and submission, structuring the claim so that it reaches the payer in line with the technical requirements.

When the two work in an integrated way, the revenue cycle gains on three fronts: the auditor flags inconsistencies before the billing specialist closes the claim, avoiding charges without clinical support; the billing specialist, by coding correctly and checking authorizations, avoids rejections that have nothing to do with the care content; and the recurring denials identified by the auditor feed back into the billing specialist’s process, who adjusts coding patterns for the next claims.

The table below summarizes the main criteria that distinguish the two profiles:

Main challenges in hospital billing

Growing volume and complexity

Each payer has its own contracts, tables and audit rules. A hospital with 15 different payers has to master 15 distinct sets of requirements and keep them up to date as contracts are revised.

Incomplete clinical documentation

Procedures performed but not recorded in the medical record cannot be charged. Materials used but not entered in the system generate silent underbilling: losses that do not appear in any denial report because they were never charged in the first place.

Tight deadlines

Payers set contractual windows for submitting claims. Delays mean losing the right to bill. With overloaded teams and fragmented systems, meeting deadlines is a permanent operational challenge.

Table updates

ANS updates TUSS periodically. Brasíndice and SIMPRO are revised every two months. Outdated systems bill with revoked codes, generating avoidable denials.

Rising denials

In 2024, the initial denial rate reached 15.89% of gross revenue from health plans at Anahp member hospitals, four percentage points above 2023. Historically, this rate hovered between 3% and 5%. For a hospital with R$ 10 million in monthly revenue, the impact represents more than R$ 18 million in withheld amounts per year, most of it reversed after dispute, but with significant operational and financial cost until the appeal cycle closes.

Most common hospital billing errors

The errors that generate the most denials follow recognizable patterns. Knowing them is the first step to eliminating them:

• Missing prior authorization:elective procedure performed without the payer’s authorization or with an expired authorization code.

• Incorrect coding: use of an outdated TUSS code or one incompatible with the recorded diagnosis.

• Incomplete documentation: missing report, physician progress note or clinical justification to support the charge.

• Mismatch between diagnosis and procedure:the procedure charged is not compatible with the ICD code recorded in the medical record.

• Items not covered:charging for materials or medications outside contractual coverage without a justification of need.

• Registration errors: discrepancies in the name, CPF (Brazilian taxpayer ID) or plan member number that cause administrative rejection.

For a detailed diagnosis of each cause, the article Five common errors in hospital billing goes deeper into each of these points with practical guidance on how to fix them.

How to improve hospital billing

Improving billing happens on three simultaneous fronts: preventing errors, speeding up the process and recovering losses.

Concurrent audit

Reviewing claims during the hospital stay, and not only after discharge, makes it possible to correct errors while the patient is still in the hospital and the information is accessible. Concurrent audit reduces retrospective rework and increases the claim acceptance rate on first submission.

Integration between care and billing

Most errors originate at the interface between clinical documentation and coding. Clear communication flows between physicians, nurses and billing specialists reduce underbilling from unrecorded items and denials from incomplete documentation.

Monitoring by payer

Each payer has distinct audit standards. Mapping denials by payer makes it possible to identify specific requirements, adjust billing processes segment by segment and prioritize contract negotiations based on data.

Continuous table updates

Integrating the billing system with automatic updates of the ANS, Brasíndice and SIMPRO tables eliminates the main source of technical denials from revoked or outdated codes.

Active management of denial appeals

The denial appeal process requires solid documentation, knowledge of the regulations and systematic tracking of deadlines.

Performance indicators

Metrics such as denial rate by payer, average time to payment, first-submission acceptance rate and amount recovered through appeals are indispensable for assessing how the process is evolving and identifying where to focus efforts.

The role of artificial intelligence in hospital billing

The volume of rules, contracts and updates in hospital billing has reached a point where manual processes cannot keep up. Artificial intelligence is essential to automate the stages most susceptible to human error.

AI platforms applied to the revenue cycle can read and interpret free-text clinical records, automatically cross-check the medical record against the hospital claim to identify unbilled items, check in real time whether codes comply with each payer’s rules, generate denial appeals based on clinical evidence and transmit the XML to payers automatically.

Rivio uses artificial intelligence to manage the entire hospital revenue cycle: from medical audit to XML submission, including denial appeals. The platform identifies discrepancies, prevents invisible losses and makes sure the hospital receives the amount it is entitled to. Rivio contractually commits to reimbursing the hospital 100% if a denial is not reversed.

FAQ — frequently asked questions about hospital billing

What is hospital billing?

It is the administrative and financial process that converts the services provided by the hospital into formal charges to health plans, making sure every service provided becomes revenue for the institution.

What is the difference between hospital billing and hospital auditing?

They are complementary processes. Auditing checks whether the clinical records are correct and whether the claim was assembled in compliance with the payers’ rules. Billing turns those audited records into a formal charge. Each depends on the other: without auditing, billing is exposed to denials; without structured billing, auditing has nothing to work on.

What are the main causes of denials in billing?

The most frequent are: missing prior authorization, incorrect coding in the TUSS table, incomplete clinical documentation, mismatch between the diagnosis and the procedure charged and registration errors. For a detailed analysis of each cause, see Main causes of denials: how to identify and resolve them.

How can hospitals reduce billing denials?

Prevention begins before the claim is submitted: concurrent audit during the hospital stay, integration between care and billing, up-to-date tables and team training. For practical strategies, see Hospital billing management: challenges and best practices.

What is the TISS standard and why is it mandatory?

TISS (Supplementary Health Information Exchange) is the electronic standard defined by ANS for transmitting data between providers and payers. Its use is mandatory across the entire private healthcare sector. Learn more in What TISS is and why it is essential for hospitals.