Medical Billing Terminology

Medigap​ - Medicare supplemental health insurance for Medicare beneficiaries which may include payment of Medicare deductibles, coinsurance and balance bills, or other services not covered by Medicare. 

Modifier​ - Modifier to a CPT treatment code that provide additional information to insurance payers for procedures or services that have been altered or "modified" in some way. Modifiers are important to explain additional procedures and obtain reimbursement for them. 

N/C​ - Non-Covered Charge. A procedure not covered by the patient's health insurance plan. 

NEC​ - Not Elsewhere Classifiable. Medical billing terminology used in ICD when information needed to code the term in a more specific category is not available. 

Network Provider​ - Health care provider who is contracted with an insurance provider to provide care at a negotiated cost. 

Nonparticipation​ - When a healthcare provider chooses not to accept Medicare-approved payment amounts as payment in full. 

NOS​ - Not Otherwise Specified. Used in ICD for unspecified diagnosis. 

NPI Number​ - National Provider Identifier. A unique 10 digit identification number required by HIPAA and assigned through the National Plan and Provider Enumeration System (NPPES).

OIG​ - Office of Inspector General - Part of department of Health and Human Services. Establish compliance requirements to combat healthcare fraud and abuse. Has guidelines for billing services and individual and small group physician practices. 

Out-of Network (or Non-Participating)​ - A provider that does not have a contract with the insurance carrier. Patients usually responsible for a greater portion of the charges or may have to pay all the charges for using an out-of network provider. 

Out-Of-Pocket Expense ​- The amount the patient is responsible to pay to the provider under their insurance policy. Anything above this limit is the insurers obligation. These Out-of-pocket maximums can apply to all coverage or to a specific benefit category such as prescriptions. 

Outpatient​ - Typically treatment in a physician's office, clinic, or day surgery facility lasting less than one day.

Palmetto GBA​ - An administrator of Medicare health insurance for the Centers for Medicare & Medicaid Services (CMS) in the US and its territories. A wholly owned subsidiary of BlueCross BlueShield of South Carolina based in Columbia, South Carolina. 

Patient Responsibility​ - The amount a patient is responsible for paying that is not covered by the insurance plan.

PCP​ - Primary Care Physician - Usually the physician who provides initial care and coordinates additional care if necessary. 

POS​ - Point-of-Service plan. Medical billing terminology for a flexible type of HMO (Health Maintenance Organization) plan where patients have the freedom to use (or self-refer to) non-HMO network providers. When a non-HMO specialist is seen without referral from the Primary Care Physician (self-referral), they have to pay a higher deductible and a percentage of the coinsurance. 

POS (Used on Claims)​ - Place of Service. 

Medical billing terminology used on medical insurance claims - such as the CMS 1500 block 24B. A two digit code which defines where the procedure was performed. For example 11 is for the doctors office, 12 is for home, 21 is for inpatient hospital, etc. 

PPO​ - Preferred Provider Organization. Commercial insurance plan where the patient can use any doctor or hospital within the network. Similar to an HMO.

Medical billing Terms

Incremental Nursing Charge​ - Charges for hospital nursing services in addition to basic room and board. 

Indemnity​ - Also referred to as fee-for-service. This is a type of commercial insurance were the patient can use any provider or hospital.

 In-Network (or Participating)​ Provider ​- An insurance plan in which a provider signs a contract to participate in. The provider agrees to accept a discounted rate for procedures. 

Inpatient​ - Hospital stay of more than one day (24 hours). IPA​ - Independent Practice Association. An organization of physicians that are contracted with a HMO plan. 

Intensive Care​ - Hospital care unit providing care for patients who need more than the typical general medical or surgical area of the hospital can provide. May be extremely ill or seriously injured and require closer observation and/or frequent medical attention. 

MAC​ - Medicare Administrative Contractor. Contractors who process Medicare claims. 

Managed Care Plan​ - Insurance plan requiring patient to see doctors and hospitals that are contracted with the managed care insurance company. Medical emergencies or urgent care are exceptions when out of the managed care plan service area. 

Maximum Out of Pocket​ - The maximum amount the insured is responsible for paying for eligible health plan expenses. When this maximum limit is reached, the insurance typically then pays 100% of eligible expenses.

Medical Assistant​ - A health care worker who performs administrative and clinical duties in support of a licensed health care provider such as a physician, physician's assistant, nurse, nurse practitioner, etc. 

Medical Coder​ - Analyzes patient charts and assigns the appropriate code. These codes are derived from ICD-9 codes (soon to be ICD-10) and corresponding CPT treatment codes and any related CPT modifiers. 

Medical Billing Specialist​ - Processes insurance claims for payment of services performed by a physician or other health care provider. Ensures patient medical billing codes, diagnosis, and insurance information are entered correctly and submitted to insurance payer. The specialist enters insurance payment information and processes patient statements and payments. Performs tasks vital to the financial operation of a practice. Knowledgeable in medical billing terminology.

Medical Necessity​ - Medical service or procedure that is performed on for treatment of an illness or injury that is not considered investigational, cosmetic, or experimental. 

Medical Record Number​ - A unique number assigned by the provider or health care facility to identify the patient medical record. 

MSP​ - Medicare Secondary Payer. 

Medical Savings Account​ - Tax exempt account for paying medical expenses administered by a third party to reimburse a patient for eligible health care expenses. Typically provided by employer where the employee contributes regularly to the account before taxes and submits claims or receipts for reimbursement. Sometimes also referred to in medical billing terminology as a Medical Spending Account. 

Medical Transcription​ - The conversion of voice recorded or hand written medical information dictated by health care professionals (such as physicians) into text format records. These records can be either electronic or paper. 

Medicare​ - Insurance provided by federal government for people over 65 or people under 65 with certain restrictions. There are 2 parts: 

● Medicare Part A​ - Hospital coverage 

● Medicare Part B​ - Physicians visits and outpatient procedures 

● Medicare Part D​ - Medicare insurance for prescription drug costs for anyone enrolled in Medicare Part A or B. 

Medicare Coinsurance Days​ - Medical billing terminology for inpatient hospital coverage from day 61 to day 90 of a continuous hospitalization. The patient is responsible for paying for part of the costs during those days. After the 90th day, the patient enters "Lifetime Reserve Days."

Medicare Donut Hole​ - The gap or difference between the initial limits of insurance and the catastrophic Medicare Part D coverage limits for prescription drugs. 

Medicaid​ - Insurance coverage for low income patients. Funded by Federal and state government and administered by states. 

Medical billing basic terms

EOB​ - Explanation of Benefits. One of the medical billing terms for the statement that comes with the insurance company payment to the provider explaining payment details, covered charges, write offs, and patient responsibilities and deductibles. 

ERA​ - Electronic Remittance Advice. This is an electronic version of an insurance EOB that provides details of insurance claim payments. These are formatted in according to the HIPAA X12N 835 standard. 

ERISA​ - Employee Retirement Income Security Act of 1974. This law established the reporting, disclosure of grievances, and appeals requirements and financial standards for group life and health. Self-insured plans are regulated by this law. 

Fee For Service​ - Insurance where the provider is paid for each service or procedure provided. Typically allows patient to choose provider and hospital. Some policies require the patient to pay provider directly for services and submit a claim to the carrier for reimbursement. The trade-off for this flexibility is usually higher deductibles and co-pays. 

Fee Schedule​ - Cost associated with each treatment CPT medical billing codes. 

Financial Responsibility​ - The portion of the charges that are the responsibility of the patient or insured. 

Fiscal Intermediary (FI)​ - A Medicare representative who processes Medicare claims. 

Formulary​ - A list of prescription drug costs which an insurance company will provide reimbursement for. 

Fraud​ - When a provider receives payment or a patient obtains services by deliberate, dishonest, or misleading means. 

GPH​ - Group Health Plan. A means for one or more employer who provide health benefits or medical care for their employees (or former employees). 

Group Name​ - Name of the group or insurance plan that insures the patient. 

Group Number​ - Number assigned by insurance company to identify the group under which a patient is insured. 

Guarantor​ - A responsible party and/or insured party who is not a patient.

HCFA​ - Health Care Financing Administration. Now know as CMS (see above in Medical Billing Terms). 

HCPCS​ - Health Care Financing Administration Common Procedure Coding System. (pronounced "hick-picks"). Three level system of codes. CPT is Level I. A standardized medical coding system used to describe specific items or services provided when delivering health services. May also be referred to as a procedure code in the medical billing glossary. The three HCPCS levels are:

● Level I - American Medical Association's Current Procedural Terminology (CPT) codes. 

● Level II - The alphanumeric codes which include mostly non-physician items or services such as medical supplies, ambulatory services, prosthesis, etc. These are items and services not covered by CPT (Level I) procedures. 

● Level III - Local codes used by state Medicaid organizations, Medicare contractors, and private insurers for specific areas or programs.

Healthcare Insurance​ - Insurance coverage to cover the cost of medical care necessary as a result of illness or injury. May be an individual policy or family policy which covers the beneficiary's family members. May include coverage for disability or accidental death or dismemberment. 

Healthcare Provider​ - Typically a physician, hospital, nursing facility, or laboratory that provides medical care services. Not to be confused with insurance providers or the organization that provides insurance coverage. 

Health Care Reform Act​ - Health care legislation championed by President Obama in 2010 to provide improved individual health care insurance or national health care insurance for Americans. Also referred to as the Health Care Reform Bill or the Obama Health Care Plan. 

HIC​ - Health Insurance Claim. This is a number assigned by the the Social Security Administration to a person to identify them as a Medicare beneficiary. This unique number is used when processing Medicare claims. 

HIPAA​ - Health Insurance Portability and Accountability Act. Several federal regulations intended to improve the efficiency and effectiveness of health care. HIPAA has introduced a lot of new medical billing terms into our vocabulary lately. 

HMO​ - Health Maintenance Organization. A type of health care plan that places restrictions on treatments. 

Hospice​ - Inpatient, outpatient, or home health care for terminally ill patients

ICD-9 Code​ - Also known as ICD-9-CM. International Classification of Diseases classification system used to assign codes to patient diagnosis. This is a 3 to 5 digit number. 

ICD 10 Code​ - 10th revision of the International Classification of Diseases. Uses 3 to 7 digit. Includes additional digits to allow more available codes. The U.S. Department of Health and Human Services has set an implementation deadline of October, 2013 for ICD-10.

Medical billing Terms

AMA​ - American Medical Association. The AMA is the largest association of doctors in the United States. They publish the Journal of American Medical Association which is one of the most widely circulated medical journals in the world. 

Aging​ - One of the medical billing terms referring to the unpaid insurance claims or patient balances that are due past 30 days. Most medical billing software's have the ability to generate a separate report for insurance aging and patient aging. These reports typically list balances by 30, 60, 90, and 120 day increments. 

Ancillary Services​ - These are typically services a patient requires in a hospital setting that are in addition to room and board accommodations - such as surgery, tests, counseling, therapy, etc.

Appeal​ - When an insurance plan does not pay for treatment, an appeal (either by the provider or patient) is the process of objecting this decision. The insurer may require documentation when processing an appeal and typically has a formal policy or process established for submitting an appeal. Many times the process and associated forms can be found on the insurance providers web site

Applied to Deductible​ - You typically see these medical billing terms on the patient statement. This is the amount of the charges, determined by the patients insurance plan, the patient owes the provider. Many plans have a maximum annual deductible that once met is then covered by the insurance provider. 

Assignment of Benefits​ - Insurance payments that are paid to the doctor or hospital for a patient's treatment.

ASP​ - Application Service Provider. This is a computer based services over a network for a particular application. Sometimes referred to as SaaS (Software as a Service). There application service providers that offer Medical Billing. The appeal of an ASP is it frees a business of the the need to purchase, maintain, and backup software and servers. 

Beneficiary​ - Person or persons covered by the health insurance plan. 

Blue Cross Blue Shield (BCBS)​ - An organization of affiliated insurance companies (approximately 450), independent of the association (and each other), that offer insurance plans within local regions under one or both of the association's brands (Blue Cross or Blue Shield). Many local BCBS associations are nonprofit BCBS sometimes acts as administrators of Medicare in many states or regions

Capitation​ - A fixed payment paid per patient enrolled over a defined period of time, paid to a health plan or provider. This covers the costs associated with the patient's health care services. This payment is not affected by the type or number of services provided.

CHAMPUS​ - Civilian Health and Medical Program of the Uniformed Services. Recently renamed TRICARE. This is federal health insurance for active duty military, National Guard and Reserve, retirees, their families, and survivors. 

Charity Care​ - When medical care is provided at no cost or at reduced cost to a patient that cannot afford to pay. 

Clean Claim​ - Medical billing term for a complete submitted insurance claim that has all the necessary correct information without any omissions or mistakes that allows it to be processed and paid promptly. 

Clearinghouse​ - This is a service that transmits claims to insurance carriers. Prior to submitting claims the clearinghouse scrubs claims and checks for errors. This minimizes the amount of rejected claims as most errors can be easily corrected. Clearinghouses electronically transmit claim information that is compliant with the strict HIPAA standards (this is one of the medical billing terms we see a lot more of lately). 

CMS​ - Centers for Medicaid and Medicare Services. Federal agency which administers Medicare, Medicaid, HIPAA, and other health programs. Formerly known as the HCFA (Health Care Financing Administration). You'll notice that CMS it the source of a lot of medical billing terms. 

Medical billing basic definitions like copay, coins, deductible, write off

Benefit Period—

The way that Original Medicare measures your use of hospital and skilled nursing facility (SNF) services. A benefit period begins the day you go to a hospital or skilled nursing facility. The benefit  period ends when you haven’t received any inpatient hospital care (or skilled care in a SNF) for 60 days in a row. If you go into a hospital or a skilled nursing facility after one benefit period has ended, a new benefit period begins.

 Coinsurance—

An amount you may be required to pay as your share of the costs for services, after you pay any plan deductibles. Coinsurance is usually a percentage (for example, 20%).

Copayment—

An amount you may be required to pay as your share of the cost for a medical service or supply, like a doctor’s visit or a prescription. A copayment is usually a set amount, rather than a percentage. For example, you might pay $10 or $20 for a doctor’s visit or prescription.

Deductible—

The amount you must pay for health care or prescriptions, before Original Medicare, your prescription drug plan, or other insurance begins to pay.

Excess Charges (Write off)—

If you have Original Medicare, and the amount a doctor or other health care provider is legally permitted to charge is higher than the Medicare-approved amount, the difference is called the excess charge.