What Is the Technical Component in Medical Billing?
Gain clarity on medical billing by understanding the distinction between facility, equipment, and support staff costs versus physician services.
Medical billing involves various charges contributing to healthcare service costs. Many medical procedures separate distinct elements for billing, allowing a detailed cost breakdown. Understanding these components helps patients and healthcare consumers gain clarity on how charges are determined. This breakdown illustrates contributions to a medical service, from equipment use to professional expertise.
Defining the Technical Component
The “technical component” (TC) in medical billing refers to expenses for performing a diagnostic test or procedure. This component covers operational costs, excluding professional interpretation or physician supervision. It includes equipment, such as an MRI or X-ray device, and facility costs like exam or operating rooms.
The TC also encompasses the cost of supplies consumed during the procedure, such as contrast materials for imaging or reagents for laboratory tests. Additionally, non-physician personnel efforts, including technologists who operate equipment and nurses who assist, are part of the technical component. For instance, an X-ray’s TC covers the machine, film, room, and technologist’s time. This component represents the overhead and logistical aspects needed to conduct the medical service.
Understanding the Professional Component
The “professional component” (PC) covers a physician’s work, including their intellectual effort, expertise, and time spent providing a medical service. This includes physician supervision of a procedure, interpretation of results, and diagnosis formulation. It represents the cognitive aspect of healthcare, where a medical professional applies knowledge and judgment.
For example, a radiologist’s analysis and written report interpreting an X-ray constitute the professional component. A pathologist analyzing a biopsy specimen or a cardiologist interpreting an electrocardiogram (EKG) also falls under this category. The PC often involves the physician’s assessment, consultation, and medical decision-making. This component reflects the value of the physician’s specialized training and experience.
Billing Methods for Components
Medical services with both technical and professional components can be billed in two ways: global billing or separate billing. Global billing occurs when a single entity bills for both components together under one charge. This method is used when the same provider or facility performs both aspects of the service, such as a physician’s office owning imaging equipment and employing the interpreting physician. When a global service is billed, no modifiers are needed, as the single charge covers both components.
Separate billing involves one entity billing the technical component and another billing the professional component. For instance, a freestanding radiology clinic might bill for the technical component (using modifier TC), covering equipment and staff. An independent radiologist then bills for the professional component (using modifier 26) for interpreting the images. This separation is common when services are provided in different settings or by entities not sharing the same tax identification number. The choice of billing method depends on where the service is performed and who owns the equipment.
Common Applications of the Technical Component
The technical component is identified and billed in various diagnostic services requiring specialized equipment and supporting personnel. Imaging services, such as X-rays, magnetic resonance imaging (MRIs), and computed tomography (CT) scans, involve a technical component. In these cases, the TC covers the imaging machine, facility space, and technologist’s time to perform the scan.
Laboratory tests also have a technical component, covering equipment, reagents, and the labor of medical technologists who process samples. However, the technical component of lab services furnished to hospital inpatients or outpatients is not separately payable to external providers, as it is often bundled into the hospital’s overall payment. Certain diagnostic procedures, such as electrocardiograms (EKGs) and electroencephalograms (EEGs), include a technical component for the equipment, supplies, and staff involved in conducting the test. The technical component in these applications accounts for costs associated with the physical performance of the test in billing.