What Is an Entity Code in Medical Billing?


An entity code is used in medical billing to identify the type of entity billing for the services. Entity codes are used to ensure that the correct entity is being billed and that Medicare and Medicaid are not being billed for the same service. Entity codes can be assigned by the provider, billing office, and the payer.

Entity codes are necessary because they help to ensure that the correct entity is being billed for the services. If the wrong entity code is used, it can result in the wrong entity being billed, leading to problems with Medicare and Medicaid.

Each entity has its own code, and it is vital to make sure that the correct code is used when billing. If you are unsure of the entity code to use, you can always ask the provider, the billing office, or the payer for help.

Medical billing services have more than its share of jargon, but most of it is easy to decipher with a little research and familiarity with medical practices. Entity code errors on claim denials are unfortunately not among the easier mysteries to solve.

Entities in Medical Billing

Generally, the definition of an entity is a person or thing with an independent existence—so an individual, a corporation, or a small business would be an entity. The same is true for medical billing, where the entity referenced could be the patient, the provider, or even the medical billing service if an outside billing company is used as a third-party biller.

That’s why the subject of “entity” errors is so confusing for medical billers who are trying to sort out the issues with a rejected or denied claim. In different sections of the form, a problem with the entity ID or inclusion could be in reference to any one of the various entities involved in the transaction.

Entity Related Errors in Coding and Claims

When a claim is rejected or denied, the explanation should give you an indication of which entity is the problem by stating that it is the patient/client, or by what box it is in on the form. If it isn’t clear, you will need to contact the payer for clarification.

Different software may word explanations slightly differently, but the issues that arise are common to all of them. The following are a few of the entity code errors you may encounter.

  • Entity’s health insurance claim number (HICN)—This error shows up when a claim has been corrected and resubmitted. In this case, the entity is the payer and the biller needs to ensure that the claim number assigned to the original claim by the payer is used.
  • Entity’s contract/member number—Errors with this reference usually are pointing out missing information, and the entity is the patient. If the information was filled out in the claim, the problem could be that the patient’s coverage has changed, they were not covered on the date the service was delivered, or a newborn patient has not been added to the policy yet. This error will also show up if the claim has been submitted to the wrong payer since the patient’s member number or ID would not match with their system.
  • This code requires the use of an entity code—In this case, the biller must attempt to determine which entity was not clearly identified by checking each box of the claim. In addition to the patient and the provider, be sure to check for correct identifying medical billing services and any referring physician, if applicable.
  • Service Location: Entity’s Postal/Zip Code: This refers to the provider. Make sure to include the final four digits of the nine-digit zip code (not just 0000) if this shows up as an error.

In most cases, you will be able to determine which entity is indicated by the information being required, or the location on the form. In cases where this is not clear, a call to the payer is probably going to be required to find out exactly what information they need.

Medical billing is becoming more complex all the time. If you are still doing medical billing in-house, give us a call at 800-640-6409 or request a free demo. Our client case studies illustrate the benefits of having Medcare MSO handle billing and revenue cycle management (RCM) (RCM) and we are happy to answer any questions you have.

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