Definition: Hospital-based billing and provider-based billing are two separate reimbursement models used in health care settings. Hospital-based billing refers to a system in which services provided within a hospital-owned facility are billed as both professional and facility fees. This means that patients may receive two separate charges where one is for the health care professional's service and another for the hospital's operational expenses, such as equipment, clinical support, and infrastructure. Provider-based billing is when a health care provider operates in an outpatient clinic or office that is not affiliated with a hospital, and all services are billed under a single professional fee without additional facility charges.1–3
How it relates to quality-based care: These billing structures have important implications for pharmacists in accountable care organizations (ACOs) and patient-centered medical homes (PCMHs), which aim to improve quality-based care and reduce overall costs. Hospital-based billing can increase patients’ out-of-pocket costs because of dual charges. In this setting, pharmacists also face barriers in obtaining reimbursement for direct patient care services, as they are not recognized as independent providers under Medicare Part B. This limits their ability to bill for services independently, requiring alternative billing mechanisms such as incident-to billing under a physician or through facility fee structures. Within PCMHs, this structure typically results in pharmacists being funded through shared-savings arrangements, although direct reimbursement may sometimes be possible. In contrast, provider-based billing only bills patients for professional services, and in these settings, pharmacists may have the ability to use medical billing codes, especially in states where provider status is recognized by state Medicaid programs and commercial insurers. While pharmacists are not recognized as providers under Medicare, state-level and payer specific policies can expand their opportunities to secure reimbursement.1,3-5
These structural differences also shape pharmacist compensation models and the sustainability of pharmacist-led care. In hospital-owned outpatient clinics, pharmacists are often salaried employees whose contributions are captured indirectly through the hospital’s overall reimbursement. In provider-based settings, however, pharmacists may be better positioned to generate revenue through billable services.1 Recognizing how these billing models intersect with ACO and PCMH frameworks can help optimize pharmacist integration, ensuring financial viability, and advancing value-based, patient-centered care.
Involved organizations/oversight: Oversight of billing models and the integration into quality-based care involves several organizations. At the federal level, CMS sets reimbursement regulations, determines recognition of providers under Medicare Part B and oversees ACO programs such as shared-savings programs.1,5 State Medicaid programs play a role in determining whether pharmacists are recognized as providers and what services they may bill for, where commercial insurers vary in their reimbursement of pharmacist-led services.
Accrediting bodies such as the Joint Commission and the National Committee for Quality Assurance influence how billing and care models are structures to meet quality and safety requirements. Additionally, professional pharmacy organizations advocate for pharmacist provider status and reimbursement reform across the country.1 Together, these organizations shape how hospital-based billing and provider-based billing function within ACOs and PCMHs directly affecting the ability of pharmacists to deliver sustainable, patient-centered clinical services.
In summary, hospital-based and provider-based billing models each have implications for pharmacist reimbursement. Understanding these structures is important to align pharmacists' services within ACOs and PCMHs where controlling cost and meeting quality metrics are central goals. By navigating these frameworks effectively, pharmacists can enhance care integration, ensure financial sustainability, and advance the delivery of quality-based, patient-centered care.
References:
1. Kliethermes MA and Brown T. Building a Successful Ambulatory Care Practice: A Complete Guide for Pharmacists. American Society of Health System Pharmacists; 2012.
2. American Academy of Professional Coders. Your guide to provider based billing. Available at: www.aapc.com/blog/51893-your-guide-to-provider-basedbilling/?srsltid=AfmBOopN9iZNdhkewnTu6RtsFDOUiXRH8eHdbsvl-gsDONvZwF4evdmb
3. Maddox M, Hille B, Cupp R, et al. Payment for pharmacist services white paper. California Pharmacists Association. Available at: https://cpha.com/wpcontent/uploads/2017/09/White-Paper_Final_Print.pdf
4. Medical Billers and Coders. 10 facts about pharmacist billing in physician based clinics. Available at: www.ohiopharmacists.org/aws/OPA/asset_manager/get_file/168462?ver=1
5. Bernstein I and Murphy EM. Accomplishing provider status: Getting pharmacists paid for their patient care services. Available at: www.pharmacist.com/Blogs/CEOBlog/accomplishing-provider-status-getting-pharmacists-paid-for-their-patient-careservices. Accessed September 18, 2025.
Contributing authors:
Marilee D. Clemons, PharmD, BCACP
Ambulatory Pharmacy Manager
UToledo Health
Toledo, OH