Covered Service

Health benefits which are allowed per a contract with a health insurance company or a health benefit allowed by Medicare, Medicaid, Tricare or Workers Compensation.

CPT – Current Procedural Terminology: 

CPT is a list of procedure codes owned, copyrighted and developed by the American Medical Association. A procedure is something that the doctor does to a patient during a visit. For example, if you cut your finger and the doctor repairs the cut, there is a procedure code to put on the claim form. The code is recognized by coders, and insurance company claims software. Let’s look at the cut on the  finger. To convert the repair to a CPT code, you need to know the length of the wound, in centimeters so you can select the correct CPT code. For the purpose of this example. You have a 1cm simple cut on your index finger. The repair of this cut would be 12001. Every procedure performed MUST be supported by a correct diagnosis code or ICD-9 code. The diagnosis or ICD-9 code for an unspecified wound of the finger would be 883.0. Now, if you saw ICD-9 code 042 used with CPT code 12001, you would be confused. That would be like saying the doctor sutured the patient’s finger cut because the patient had AIDS. Therefore it doesn’t make sense to suture a wound if there is no open wound diagnosis.

Deductible:

A deductible is a contractual amount that the patient is required to pay as an out of pocket expense before the insurance company pays any claim sent to them. The amount of deductible varies per patient and per insurance policy. Commercial insurance and Medicare deductibles start in January of each year. Tricare deductibles start in October each year. A patient may have a $1,000 deductible. The patient is seen by the doctor on January 5th. The claim is for $250.00. The insurance company allows $100 for the benefit or covered service. The patient hasn’t met their deducible yet. The $100 is applied to the deductible. Now the patient has a $900 deductible to meet before the claim is paid by the insurance company. The patient comes in each month for the next 9 months. The claim is sent in September. The $100 is applied to the remaining deductible. If the patient comes in the next month (October), the deducible has been satisfied, so now a check will be sent by the insurance company. Whether the patient actually pays the deductible is between the provider and patient. The insurance company doesn’t care if the patient doesn’t actually pay the deductible. All this means is that with a $1,000 deductible, with $100 allowed for the visit it will take 10 visits before the insurance company will release any money to pay the patient’s claim. Medicare does care if the provider collects the deductible from the patient.

Dependents: 

A Spouse and/or an unmarried child (whether natural, adopted or step) of an insured person. When looking at the insurance card (other than Medicare) you may see the policy number and at the end, you may see 01, 02, 03, 04 or another 2 digit number. These numbers have meaning, but could vary per insurance company.

00: Insured or member (Some insurance companies may have 01 as the insured)

Co-Payment

Co-payment or co-pay is a predetermined (flat) fee, based on a contract between an employer or patient and an insurance company A co-payment that a patient pays for health care services is in addition as an out of pocket expense to what the insurance company covers for the service provided. A co-pay is separate from a deductible and co-insurance. For example, a patient may have coverage through Blue Cross and Blue Shield. The policy may require the patient to pay a $10 copayment for each office visit, regardless of the type or level of services provided during the visit. A patient coming in for daily blod pressure checks could be required to pay the co-pay for each BP check visit. Co-payments are not usually specified by percentages. Co-pays are usually paid at the time of service. Some providers will bill the patient for the co-pays. A huge question that is always asked is, “Can we write off the co-pay owed by the patient. This question has NO easy answer. Again, the co-pay is a contractual amount that the patient is required to pay. Writing off co-pays on a routine basis could be determined by a Government Inspector as an incentive to have the paient make referrals to the provider. The insurance company could take the position that writing off a co-pay is a contract violation. The key word with doing a write off is routine. Each write off should be on a case by case basis. The patient may be financially unable to pay the co-pay. If, so then it would be permissible to write off the co-pays. There are at least three (3) acceptable means of writing off what a patient may owe. (1) The provider has made every effort to make collection on what is owed and this includes a debt collection agency. (2) if it would cost more to collect than what is owed. For example, the patient owes $1.95. It costs $10 in administrative expenses to bill a patient. Therefore the cost to collect is more than what is owed. The $1,85 could ne adjusted off as a small balance adjustment, and (3) The patient is financially unable to pay. The patient must prove they are financially unable to pay. This can be in the form of wage statements, bank statement, tax statement and lists of monthly bills such as electricity, food, and other bills.

COBRA Consolidated Omnibus Budget Reconciliation Act.  

This is a Federal Law that allows a worker to continue to purchase employer paid health insurance for up to 18 months if you lose your job or your coverage is otherwise terminated. For example, your employer provides you with health insurance through United Healthcare as a benefit of employment. The employer is going out of business or you leave for another job. Under COBRA, you can continue to keep your United Healthcare coverage when you leave your employer. 

The catch to this is that YOU must continue to pay the premiums that your employer paid. Some people decline this because they cant afford the premiums. If the patient kept the COBRA coverage make sure you verify that the coverage is still in effect at the time of service. The patient may present the United healthcare insurance card but you find out that the patient did not pay the premiums, so the coverage was terminated. 

CMS – Centers for Medicare and Medicaid Services

CMS is a Federal Agency responsible for overseeing and regulating Medicare and Medicaid. CMS come under the jurisdiction of the Department of Health and Human Services. CMS is also the agency responsible for monitoring an approving the code sets (CPT and ICD-9) under HIPAA. Medicare HMOs come under the jurisdiction of the area CMS offices. Medicaid HMOs come under the jurisdiction of a State Medicaid agency. CMS used to be called HCFA, the Health Care Financing Administration.

CMS 1500: 

The CMS 1500 is the current HIPAA approved standard paper claim form submitted to insurance companies to have the outpatient health benefit or the contracted provider visit paid. The CMS 1500 form is designed by the National Uniform Claim Commission. Most insurance companies desire to have the CMS 1500 form sent to them in an electronic format. The fields or blocks on the form are the same regardless if on paper or done electronically. The CMS 1500 claim form instructions can be found here:

 http://www.nucc.org/images/stories/PDF/claim_form_manual_v3-0_7-07.pdf 

 Coding: 

The process of converting a medical procedure, a surgical procedure, a hospital inpatient stay or a doctor visit to a CPT code. The medical diagnosis is converted to an ICD-9 code. Some supplies are converted to HCPCS Codes. The purpose of coding is to document the reason for the visit or service and what was done during that visit so that the insurance company’s computers can quickly recognize the coded numbers and process the claim for payment.

Capitation

This term can have many meanings. Capitation represents a set dollar limit that is paid to a provider by an insurance company for treating their members. This set dollar limit can be based on a monthly dollar amount, a per patient dollar amount or a per claim dollar amount. The insurance company can say that they will pay the provider $3,000 per month. This can equate to $10 per day. If the provider treats 10 patients per day, the provider makes $1.00 per patient per visit. The provider may be required to submit a claim but there won’t be any additional payment on the claim. The payment per claim could be $90 per claim. This means you send a claim and each claim should be paid $90 regardless of how many codes are submitted. With a per claim payment, the biller must keep a close eye on the claim payments, this is because some insurance companies will pay the claim less than the amount agreed upon in the contract. This will require you to appeal the incorrect payment and continue until it is paid correctly. Before agreeing to a capitated amount, the provider should make sure the capitated amount is fair and reasonable. This is something that will be discussed more in another document on Insurance Contracts.

Carrier: 

This is nothing more than a shorter name for an insurance company. For example. First Coast is the local carrier for Medicare Part B for Florida and Georgia. Anoher example would be, $75 is the usual and customary reimbursement amount for the carriers in our geographical area. In simplistic terms, all the insurance companies in our area pay $75 for a claim.

Active/inactive employee

The benefits of a plan which covers a person as an employee who is neither laid off nor retired (or as that employee’s dependent) are determined before those of a plan which covers that person as a laid off or retired employee (or as that employee's dependent). If the other plan does not have this rule and if, as a result, the plans do not agree on the order of benefits, this rule is ignored

Some health insurance plans describe Coordination of Benefits in the Benefit Manual or Summary Plan Description (SPD). For example, the following is from an employer SPD: Coordination of Benefits (COB) applies when an individual has health care coverage through more than one group program. The purpose of COB is to insure that the individual receives all of the coverage for which the individual is entitled, but no more than the actual cost for the care received. In other words, total payments from all of the insurance coverage combined cannot be more than the total charges incurred.

As you can see, COB can be very complicated. Lets look at the following examples:

EXAMPLE: SFC Stewart Lee is former military with veterans benefits. He resides in Orlando, Florida. His place of veterans treatment is the VA hospital located in Tampa, Florida. SFC Lee also has Medicare Part B as coverage. SFC Lee was seen at the Our Lady of The Blessed Acne hospital in Orlando. He asks that the claim be sent to Medicare Part B. Medicare know SFC Lee has coverage through the Veterans Administration. In this case, either Medicare or the VA is primary. Medicare doesn’t pay for what the VA doesn’t pay and the VA doesn’t pay for what Medicare doesn’t pay. Once Medicare makes its payment, SFC Lee can be responsible to the provider for any co-insurances and deductibles. Under normal circumstances with commercial health insurance, you might send the Medicare EOB to the commercial insurance company. Two things could happen. The insurance company could pay the coinsurance and/or deductible or they could deny payment by stating they don’t pay anything more than what the primary insurance company paid. This may be a clause in the patient’s health insurance contract. However, KNOW YOUR STATE COB LAW. With Medicare and the VA, SFC Lee cannot ask that the Veterans Administration be billed to pay what he owes. If SFC Lee asks that the VA be billed first, any payment that is made by the VA is considered as payment in full. I once had a SFC Lee case. He said WE made a mistake in billing Medicare. However, we followed his telephonic instructions. We refilled the claim to the VA, they paid what they would normally pay and we refunded Medicare the payment they made. From that point on, it became office compliance policy that under NO circumstance was a patient claim with Medicare and VA to be sent to Medicare without written instructions from the patient.

Order of Benefit Determination

Use the first of the following rules which applies: 

1. Nondependent/dependent. The benefits of the plan which covers the person as an employee, member or subscriber (that is, other than as a dependent) are determined before those of the plan which covers the person as a dependent, except that, if the person is also a Medicare beneficiary and as a result of the rule established by Title XVIII of the Social Security Act and implementing regulations, Medicare is— 

A. Secondary to the plan covering the person as a dependent; and

B. Primary to the plan covering the person as other than a dependent (for example, a retired employee), then the benefits of the plan covering the person as a dependent are determined before those of the plan covering that person as other than a dependent; 

2. Dependent child/parents not separated or divorced. The rules for the order of benefits for a dependent child when the parents are not separated or divorced are as follows:

A. The benefits of the plan of the parent whose birthday falls earlier in a year are determined before those of the plan of the parent whose birthday falls later in that year;

B. If both parents have the same birthday, the benefits of the plan which covered the parent longer are determined before those of the plan which covered the other parent for a shorter period of time; 

C. The word birthday refers only to the month and day in a calendar year, not the year in which the person was born; and 

D. If the other plan does not have the rule described in subparagraphs

Claim

A request for benefits of a plan to be provided or paid is a claim. The benefit claimed may be in the form of—

1. Services (including supplies); 

2. Payment for all or a portion of the expenses incurred;

3. A combination of paragraphs (2)(B)1. and 2.; or

4. An indemnification;

 Claim determination period. This is the period of time, which must not be less than twelve (12) consecutive months over which allowable expenses are compared with total benefits payable in the absence of COB, to determine whether over insurance exists and how much each plan will pay or provide.

1. The claim determination period is usually a calendar year, but a plan may use some other period of time that fits the coverage of the group contract. A person may be covered by a plan during a portion of a claim determination period if that person's coverage starts or ends during the claim determination period.

2. As each claim is submitted, each plan is to determine its liability and pay or provide benefits based upon allowable expenses incurred to that point in the claim determination period. That determination is subject to adjustment as later allowable expenses are incurred in the same claim determination period; 

 Coordination of benefits. This is a provision establishing an order in which plans pay their claims;

(4) Rules for Coordination of Benefits— Order of Benefits. 

(A) General. The general order of benefits is as follows:

1. The primary plan must pay or provide its benefits as if the secondary plan(s) did not exist. A plan that does not include a coordination of benefits provision may not take the benefits of another plan as defined in subsection (2)(F) into account when it determines its benefits. There is one (1) exception—a contract holder’s coverage that is designed to supplement a part of a basic package of benefits may provide that the supplementary coverage shall be excess to any other parts of the plan provided by the contract holder; and 

2. A secondary plan may take the benefits of another plan into account only when, under these rules, it is secondary to that other plan.

20 CSR 400-2.030 Group Coordination of Benefits

PURPOSE: This rule restricts the use of coordination of benefits provisions in group health insurance plans to those situations where they may be equitably applied

(1) Applicability. The purpose of this rule is to— (A) Permit, but not require, plans to include a coordination of benefits (COB) provision;

(B) Establish an order in which plans pay their claims; 

(C) Provide the authority for orderly transfer of information needed to pay claims promptly; 

(D) Reduce duplication of benefits by permitting a reduction of the benefits paid by a plan where the plan, pursuant to rules established by this rule, does not have to pay its benefits first; 

(E) Reduce claims payment delays; and 

(F) Make all contracts that contain a COB provision consistent with this rule.

(2) Definitions. The following words and terms, when used in this rule, shall have the following meanings unless the context clearly indicates otherwise: 

(A) Allowable or Allowable expense. 

1. Allowable or Allowable expense means the necessary, reasonable and customary item of expense for health care when the item of expense is covered at least in part under any of the plans involved, except where a statute requires a different definition. 

2. Notwithstanding this definition, items of expense under coverages, such as dental care, vision care, prescription drug or hearing- aid programs, may be excluded from the definition of allowable expense. A plan which provides benefits only for any of these items of expense may limit its definition of allowable expenses to like items of expense. 

3. When a plan provides benefits in the form of service, the reasonable cash value of each service will be considered as both an allowable expense and a benefit paid. 

4. The difference between the cost of a private hospital room and the cost of a semiprivate hospital room is not considered an allowable expense under this definition unless the patient’s stay in a private hospital room is medically necessary in terms of generally accepted medical practice. 

Medicare benefits

However, if the person is also a Medicare beneficiary, and if the rule established under the Social Security Act of 1965, as amended, makes Medicare secondary to the plan covering the person as a dependent of an active employee, the order of benefit determination is:

a. First, benefits of a plan covering a person as an employee, member, or subscriber.

b. Second, benefits of a plan of an active worker covering a person as a dependent. 

c. Third, Medicare benefits.  

(b) Except as stated in paragraph (c), if two or more policies or plans cover the same child as a dependent of different parents: 

1. The benefits of the policy or plan of the parent whose birthday, excluding year of birth, falls earlier in a year are determined before the benefits of the policy or plan of the parent whose birthday, excluding year of birth, falls later in that year; but 

2. If both parents have the same birthday, the benefits of the policy or plan which covered the parent for a longer period of time are determined before those of the policy or plan which covered the parent for a shorter period of time. 

However, if a policy or plan subject to the rule based on the birthdays of the parents coordinates with an out-of-state policy or plan which contains provisions under which the benefits of a policy or plan which covers a person as a dependent of a male are determined before those of a policy or plan which covers the person as a dependent of a female and if, as a result, the policies or plans do not agree on the order of benefits, the provisions of the other policy or plan determine the order of benefits. 

(c) If two or more policies or plans cover a dependent child of divorced or separated parents, benefits for the child are determined in this order: 

1. First, the policy or plan of the parent with custody of the child. 

2. Second, the policy or plan of the spouse of the parent with custody of the child. 

3. Third, the policy or plan of the parent not having custody of the child. 

However, if the specific terms of a court decree state that one of the parents is responsible for the health care expenses of the child and if the entity obliged to pay or provide the benefits of the policy or plan of that parent has actual knowledge of those terms, the benefits of that policy or plan are determined first, except with respect to any claim determination period or plan or policy year during which any benefits are actually paid or provided before the entity has the actual knowledge. 

(d) The benefits of a policy or plan which covers a person as an employee who is neither laid off nor retired, or as that employee's dependent, are determined before those of a policy or plan which covers the person as a laid-off or retired employee or as the employee's dependent. If the other policy or plan is not subject to this rule, and if, as a result, the policies or plans do not agree on the order of benefits, this paragraph does not apply. 

(e) If none of the rules in paragraph (a), paragraph (b), paragraph (c), or paragraph

(d) determine the order of benefits, the benefits of the policy or plan which covered an employee, member, or subscriber for a longer period of time are determined before those of the policy or plan which covered the person for the shorter period of time. 

(5) Coordination of benefits is not permitted against an indemnity-type policy, an excess insurance policy as defined in s. 627.635, a policy with coverage limited to specified illnesses or accidents, or a Medicare supplement policy. 

COB – Coordination of Benefits

Sometimes a patient will have more than one health insurance policy. This could be a patient with Medicare and Medicaid. Medicaid is usually the health care benefit that is billed last. The patient could have Medicare and coverage under the Veterans Administration. The patient could be covered under health care provided as a benefit of employment through their own employer or through their spouses employer. If so, the two insurance companies are required to determine which policy is primary or which is secondary. Cob also includes other factors such as birthdate of parents who is providing healthcare to a child. Some states have laws regulating coordination of benefits.

627.4235 Coordination of benefits.-- 

(1) A group hospital, medical, or surgical expense policy, group health care services plan, or group-type self-insurance plan that provides protection or insurance against hospital, medical, or surgical expenses delivered or issued for delivery in this state must contain a provision for coordinating its benefits with any similar benefits provided by any other group hospital, medical, or surgical expense policy, any group health care services plan, or any group-type self-insurance plan that provides protection or insurance against hospital, medical, or surgical expenses for the same loss.

(2) A hospital, medical, or surgical expense policy, health care services plan, or self-insurance plan that provides protection or insurance against hospital, medical, or surgical expenses issued in this state or issued for delivery in this state may contain a provision whereby the insurer may reduce or refuse to pay benefits otherwise payable thereunder solely on account of the existence of similar benefits provided under insurance policies issued by the same or another insurer, health care services plan, or self-insurance plan which provides protection or insurance against hospital, medical, or surgical expenses only if, as a condition of coordinating benefits with another insurer, the insurers together pay 100 percent of the total reasonable expenses actually incurred of the type of expense within the benefits described in the policies and presented to the insurer for payment. 

Assignment of Benefit (AOB)

This is a request sent to the insurance company, signed by the patient or member , requesting that the payment of their health benefit be sent to a person they designate to receive the payment of the health benefit. This request may or may not be honored and accepted by the insurance company depending on the patient’s or member’s health benefit contract or State Law. The patient or member’s health benefit contract may prohibit the assignment of the health benefit payment to anyone. State Law such as in Florida and Louisiana may require the insurance company to honor the Assignment request even if the contract prohibits it. If the Assignment is prohibited, the payment of the health benefit will be sent to the patient or member. The requires the provider to bill the patient or member. State Assignment of Benefit Laws can be referenced on the American College of Emergency Physician (ACEP) website: http://www.acep.org/advocacy.aspx?LinkIdentifier=id&id=29364&fid=1018&Mo =No

 Authorization 

Some patients, such as HMO patients may be required to obtain permission or authorization to receive certain services. Sometimes this is inpatient medical care which is when the patient is admitted to the hospital by their primary care provider or an emergency care provider or outpatient visits to an out of network provider.

Balance Bill 

This would be the amount of the debt that the patient owes the doctor after the patient’s commercial insurance company didn’t pay and is being billed for. Balance Billing can be regulated based on the type of health insurance such as Workers Compensation or Medicaid , State law or a provider contract. For example. If the patient has Medicaid and the provider is enrolled with Medicaid, the provider has agreed to accept the Medicaid payment as payment in full. California, Florida and other States have Laws prohibiting the balance billing of an HMO member if the insurance company accepts liability for the claim. In Florida, this law would be FS 641.3154. The contract that the provider has, may have language that states the contracted payment is accepted as payment in full with no patient balance billing.

Allowed or Allowable

This is an amount established by an insurance company that it will pay for a health benefit. This varies per insurance company and per patient benefit contract. Some insurance companies may allow 100% of the submitted charges as the allowable amount. Some may establish their own internal amount. Medicare and Medicaid have their own established allowed amounts. Medicare pays 80% of its allowed amount if the patient has met their annual deductible. The patient pays the other 20% of the allowable. With Medicaid, it pays 100% of its allowable if the service is covered. Doctors or providers, when enrolling with Medicare and Medicaid agree to accept the allowed amount as payment in full. This means the patient cannot be billed for the difference between the provider’s charges and the Medicare/Medicaid allowed amounts. For example, a doctor may charge $160 for an office visit. The patient may have Medicare. Medicare may allow $60 for the visit. If the patient met their annual deductible, Medicare pays the doctor 80% of the $60 or $48. The patient pays the $12 difference between the $60 allowed amount and the $48 payment. The doctor cannot charge the patient the difference between the $160 charge and the $60 allowed amount. The provider must perform an adjustment between the $160 charge and $60 allowed amount. The patient can only be billed for their 20% of the allowable and any amounts applied to their deductible. With commercial insurance, if the doctor is non-par or not contracted with the patient’s health insurance company, the doctor doesn’t have to accept the allowed amount or paid amount as payment in full. The provider can bill the patient the difference between the charges and payment. This may not be so with HMOs in a state with a no-balance billing HMO law.

Ancillary Services: 

Medical care, other than those provided by the physician or hospital, which are related to a patient’s care. Examples are laboratory work, x-rays, physical therapy, and anesthesia 

ATD (Applied to Deductible)

The portion of the claim that the patient is required to meet before the insurance company pays the claim. The claim may have been $100. The insurance company allows $100. The patient has a $100 deductible they haven’t met. The EOB is received without payment with the $100 ATD (Applied to the deductible). You would change the account responsibility to self Pay and bill the patient the $100 that is owed.

Accord and Satisfaction

An accord and satisfaction is a legal term we face when an insurance company or patient writes “paid in full” on the check which is also known as an instrument. Some people do this in the belief that if they do this, they no longer owe anything on their debt. An accord is an offer to settle the debt for an amount that is less than what is owed. A satisfaction is an agreement to the accord. Some states have laws that regulate an accord and satisfaction. For example, under Florida Law, the law states the following:

673.3111 Accord and satisfaction by use of instrument.--

(1) If a person against whom a claim is asserted proves that that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, that the amount of the claim was unliquidated or subject to a bona fide dispute, and that the claimant obtained payment of the instrument, the following subsections apply.

 (2) Unless subsection (3) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. 

(3) Subject to subsection (4), a claim is not discharged under subsection (2) if either paragraph (a) or paragraph (b) applies: 

(a) The claimant, if an organization, proves that: 

1. Within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office, or place; and 

ABN (Advanced Beneficiary Notice)

In Medical Billing, we have our own language. Things such as EOBs, PPOs, HMOs, POSs, Catastrophic Cap, Deductibles and more can be very frightening if not understood. During training, medical coders and medical billers learn medical terminology. Medical Billing terminology is going to the next step to learn language medical billers face every day when interacting with patients, health benefits, and claims. There is a huge difference between otitis media and coordination of benefits (COB). Otitis Media is medical terminology. It is also a diagnosis that is converted by a coder from words to numbers that are recognized by an insurance company. COB is medical billing terminology, used by medical billers when interacting with multiple insurance policies carried by a patient. 

An ABN is a written notice from Medicare (standard government form CMS-R- 131), given to you before receiving certain items or services, notifying the patient:

• Medicare may deny payment for that specific procedure or treatment. 

• The patient will be personally responsible for full payment if Medicare denies payment.

An ABN gives the patient the opportunity to accept or refuse the items or services and protects the patient from unexpected financial liability in cases where Medicare denies payment. It also offers the patient the right to appeal Medicare's decision. You follow office policy on keeping the ABN form on file and you ad the modifier GA to the claim. Modifier GA informs Medicare of the ABN transaction. If you do not have the patient sign the ABN form and the claim is denied, then you cannot bill the patient for the denied claim.

The patient has the option to receive the items or services or to refuse them. In either case, the patient should choose one option on the form by checking the box provided, and then signing and dating it in the space provided.

When the patient signs an ABN and becomes liable for payment, the patient will have to pay for the item or service themselves, either out-of-pocket or by some other insurance coverage which they may have in addition to Medicare. Medicare fee schedule amounts and balance billing limits do not apply. The amount of the bill is a matter between the patient and provider. If this is a concern for the patient, they might want to ask for a cost estimate before they sign the ABN.

Glossary of Insurance and Medical Billing Terms

A 

Accept Assignment Provider has agreed to accept the insurance company allowed amount as full payment for the covered services. 

Adjudication The final determination of the issues involving settlement of an insurance claim. 

Allowed Amount The amount of the billed charge the insurance company deems is payable. 

AMA American Medical Association www.ama-assn.org 

Ambulatory Care Any medical care delivered on an outpatient basis.

 Ancillary Services Services including laboratory, radiology, home health and skilled nursing facilities 

Assignment of Benefits The patient or guardian signs the Assignment of Benefits form so that the medical provider will receive the insurance payment directly. 

Authorization Approval from insurance company is required for patient to receive services. Prior Authorization may be necessary before hospital admission, or before care is given by non-HMO providers. 

B 

Beneficiary Person covered by health insurance or Medicare benefits. 

C 

Capitation A payment methodology in which the physician is paid a set dollar amount determined by per member per month calculation to deliver medical services to a specified group of people.

 CCS California Children Services -- A state program for children with certain diseases or health problems. 

CHDP Child Health and Disability Prevention Program -- A preventive program that delivers periodic health assessments and services to low income children and youth in California. 

Claim Response Report Palmetto GBA’s GPNet Claim Acceptance Response Report. This report is available for download immediately after claims submission. Report includes total claims submitted, accepted or rejected with error messages. 

Clearinghouse A company that, for a fee, electronically receives batches of claims from providers or billing centers and retransmits the data electronically to the designated payers. There is a contractual financial relationship between the clearinghouse and the payer. 

CMS Centers for Medicare & Medicaid Services -- Formally known as HCFA, CMS is responsible for oversight of HIPAA administrative simplification transaction and code sets, health identifiers, and security standards. 

CMS 1450 UB-04 Uniform Bill formally known as UB-92 used for Institutional billing 

CMS 1500 The standard claim form used by health plans on which to consider payment to the medical provider

 COB Coordination of Benefits -- The process to determine the obligation of payers when a patient is covered under 2 separate health care plans to avoid duplicate payments for a single service or procedure.

 COBRA Consolidated Omnibus Budget Reconciliation Act -- Health insurance coverage that you can purchase when you are no longer employed, or awaiting coverage from a new insurance plan to begin. 

Contractual Adjustment A part of the charge that the provider or hospital must write off (not charge the patient) because of billing agreements with the insurance company.

 Co-Pay The portion of a claim that a member must pay out-of-pocket.

 CPT Code Current Procedural Terminology -- A 5-digit code used for describing the specific items and services provided in the delivery of health services. Also known as a Procedure Code. 

medical billing and coding

Skilled Nursing Facility​ - A nursing home or facility for convalescence. Provides a high level of specialized care for long-term or acutely ill patients. A Skilled Nursing Facility is an alternative to an extended hospital stay or home nursing care. 

SOF​ - Signature on File.

Software As A Service (SAAS)​ - One of the medical billing terms for a software application that is hosted on a server and accessible over the Internet. SAAS relieves the user of software maintenance and support and the need to install and run an application on an individual local PC or server. Many medical billing applications are available as SAAS. 

Specialist​ - Pphysician who specializes in a specific area of medicine, such as urology, cardiology, orthopedics, oncology, etc. Some health care plans require beneficiaries to obtain a referral from their primary care doctor before making an appointment to see a Specialist. 

Subscriber​ - Medical billing term to describe the employee for group policies. For individual policies the subscriber describes the policyholder. 

Superbill​ - One of the medical billing terms for the form the provider uses to document the treatment and diagnosis for a patient visit. Typically includes several commonly used ICD-9 diagnosis and CPT procedural codes. One of the most frequently used medical billing terms. 

Supplemental Insurance​ - Additional insurance policy that covers claims for deductibles and coinsurance. Frequently used to cover these expenses not covered by Medicare. 

TAR​ - Treatment Authorization Request. An authorization number given by insurance companies prior to treatment in order to receive payment for services rendered. 

Taxonomy Code​ - Specialty standard codes used to indicate a provider's specialty sometimes required to process a claim. 

Term Date​ - Date the insurance contract expired or the date a subscriber or dependent ceases to be eligible. 

Tertiary Insurance Claim​ - Claim for insurance coverage paid in addition to primary and secondary insurance. Tertiary insurance covers gaps in coverage the primary and secondary insurance may not cover. 

Third Party Administrator (TPA)​ - An independent corporate entity or person (third party) who administers group benefits, claims and administration for a self-insured company or group. 

TIN​ - Tax Identification Number. Also known as Employer Identification Number (EIN). 

TOP​ - Triple Option Plan. An insurance plan which offers the enrolled a choice of a more traditional plan, an HMO, or a PPO. This is also commonly referred to as a cafeteria plan. 

TOS​ - Type of Service. Description of the category of service performed. 

TRICARE​ - This is federal health insurance for active duty military, National Guard and Reserve, retirees, their families, and survivors. Formerly know as CHAMPUS. 

UB04​ - Claim form for hospitals, clinics, or any provider billing for facility fees similar to CMS 1500. Replaces the UB92 form. 

Unbundling​ - Submitting several CPT treatment codes when only one code is necessary. Untimely Submission​ - Medical claim submitted after the time frame allowed by the insurance payer. Claims submitted after this date are denied. 

Upcoding​ - An illegal practice of assigning an ICD-9 diagnosis code that does not agree with the patient records for the purpose of increasing the reimbursement from the insurance payor. UPIN​ - Unique Physician Identification Number. 6 digit physician identification number created by CMS. Discontinued in 2007 and replaced by NPI number. 

Usual Customary & Reasonable(UCR)​ - The allowable coverage limits (fee schedule) determined by the patient's insurance company to limit the maximum amount they will pay for a given service or item as defined in the contract with the patient. 

Utilization Limit​ - The limits that Medicare sets on how many times certain services can be provided within a year. The patient's claim can be denied if the services exceed this limit. 

Utilization Review (UR)​ - Review or audit conducted to reduce unnecessary inpatient or outpatient medical services or procedures. V-Codes​ - ICD-9-CM coding classification to identify health care for reasons other than injury or illness. 

Workers Comp​ - Insurance claim that results from a work related injury or illness. 

Write-off​ - Typically reference to the difference between what the physician charges and what the insurance plan contractually allows and the patient is not responsible for. May also be referred to as "not covered" in some glossary of billing terms. 

Medical billing basic terms

Practice Management Software​ - software used for the daily operations of a provider's office. Typically used for appointment scheduling and billing. 

Preauthorization​ - Requirement of insurance plan for primary care doctor to notify the patient insurance carrier of certain medical procedures (such as outpatient surgery) for those procedures to be considered a covered expense. 

Pre-Certification​ - Sometimes required by the patients insurance company to determine medical necessity for the services proposed or rendered. This doesn't guarantee the benefits will be paid.

 Predetermination​ - Maximum payment insurance will pay towards surgery, consultation, or other medical care - determined before treatment. 

Pre-existing Condition (PEC)​ - A medical condition that has been diagnosed or treated within a certain specified period of time just before the patients effective date of coverage. A Pre-existing condition may not be covered for a determined amount of time as defined in the insurance terms of coverage (typically 6 to 12 months). 

Pre-existing Condition Exclusion​ - When insurance coverage is denied for the insured when a pre-existing medical condition existed when the health plan coverage became effective. 

Premium​ - The amount the insured or their employer pays (usually monthly) to the health insurance company for coverage. 

Primary Subscriber​ (Insured) - The person under whom the insurance policy is obtained. 

Privacy Rule​ - The HIPAA privacy standard establishes requirements for disclosing what the HIPAA privacy law calls Protected Health Information (PHI). PHI is any information on a patient about the status of their health, treatment, or payments. 

Provider​ - Physician or medical care facility (hospital) who provides health care services. 

PTAN​ - Provider Transaction Access Number. Also known as the legacy Medicare number. 

Referral​ - When one provider (usually a family doctor) refers a patient to another provider (typically a specialist). 

Remittance Advice (R/A)​ - A document supplied by the insurance payor with information on claims submitted for payment. Contains explanations for rejected or denied claims. Also referred to as an EOB (Explanation of Benefits). 

Responsible Party​ - The person responsible for paying a patient's medical bill. Also referred to as the guarantor. 

Scrubbing​ - Process of checking an insurance claim for errors in the health insurance claim software prior to submitting to the payer. 

Self-Referral​ - When a patient sees a specialist without a primary physician referral.

Self Pay​ - Payment made at the time of service by the patient. 

Secondary Insurance Claim​ - claim for insurance coverage paid after the primary insurance makes payment. Secondary insurance is typically used to cover gaps in insurance coverage. 

Secondary Procedure​ - When a second CPT procedure is performed during the same physician visit as the primary procedure.

Security Standard​ - Provides guidance for developing and implementing policies and procedures to guard and mitigate compromises to security. The HIPAA security standard is kind of a sub-set or complement to the HIPAA privacy standard. Where the HIPAA policy privacy requirements apply to all patient Protected Health Information (PHI), HIPAA policy security laws apply more specifically to electronic PHI. 

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 Terminology - U,V,W

U

UB04: A form used by providers for filing claims with insurance companies. The UB04 form has a format similar to that of the CMS 1500 form.

Unbundling: This term refers to the fraudulent practice of ascribing more than one code to a service or procedure on a superbill or claim form when only one is necessary.

Untimely Submission: Claims have a specific timeframe in which they can be sent off to an insurance company for processing. If a provider fails to file a claim with an insurance company in that timeframe, it is marked for untimely submission and will be denied by the company.

Upcoding: Upcoding is the fraudulent practice of ascribing a higher ICD-9 code to a healthcare procedure in an attempt to get more money than necessary from the insurance company or patient.

Unique Physician Identification Number (UPIN): A unique six-digit identification number given to physicians and other healthcare personnel, which has subsequently been replaced by a national provider identifier (NPI) number.

Usual Customary and Reasonable (UCR): The UCR is the amount of money stipulated in a contract that an insurance company agrees to pay for healthcare costs. After passing the UCR a patient is typically responsible for covering their healthcare costs.

Utilization Limit: The limit per year for coverage under certain available healthcare services for Medicare enrollees. Once a patient passes the utilization limit for a service, Medicare may no longer cover them.

Utilization Review (UR): An investigation or audit performed to optimize the number of inpatient and outpatient services a provider performs.

V

V-Codes: A codeset under ICD-9-CM used to organize healthcare services rendered for reasons other than illness or injury.

W

Worker’s Compensation: Worker’s compensation is paid by an employer when an employee becomes ill or injured while performing routine job duties. Most states have laws requiring that companies provide worker’s compensation.

Write-Off: This term refers to the discrepancy between a provider’s fee for healthcare services and the amount that an insurance company is willing to pay for those services that a patient is not responsible for. The write-off amount may be categorized as “not covered” amounts for billing purposes.

Medical Billing Terminology - R,S,T

R

Referral: This is when a provider recommends another provider to a patient to receive specialized treatment.

Remittance Advice (R/A): The R/A is also known as the EOB, which is the document attached to a processed claim that explains the information regarding coverage and payments on a claim.

Responsible Party: The person who pays for a patient’s medical expenses, also known as the guarantor.

Revenue Code: A three-digit code used on medical bills that explains the kind of facility in which a patient received treatment.

Relative Value Amount (RVA): The median amount Medicare will repay a provider for certain services and treatments.

S

Scrubbing: A process by which insurance claims are checked for errors before being sent to an insurance company for final processing. Providers scrub claims in an attempt to reduce the number of denied or rejected claims.

Self-Referral: When a patient does their own research to find a provider and acts outside of their primary care physician’s referral.

Self-Pay: Payment made by the patient for healthcare at the time they receive it at a provider’s facilities.

Secondary Insurance Claim: The claim filed with the secondary insurance company after the primary insurance company pays for their portion of healthcare costs.

Secondary Procedure: This is when provider performs another procedure on a patient covered by a CPT code after first performing a different CPT procedure on them.

Security Standard: The security standard serves as the guidelines for policies and practices necessary to reduce security risks within the healthcare system. The security standard policies work in concert with the security guidelines set in place with the passage of HIPAA.

Skilled Nursing Facility: These are facilities for the severely ill or elderly that provide specialized long-term care for recovering patients. Skilled nursing facilities are alternative healthcare establishments to extended hospital stays and may be covered by eligible patients’ insurance policies.

Signature on File (SOF): A patient’s official signature on file for the purpose of billing and claims processing.

Software as a Service (SAAS): Medical billing software hosted off site by another company and only accessible with Internet access. SAAS is useful for providers who don’t want to maintain and update in-house medical billing software.

Specialist: A physician or medical assistant with expertise in a specific area of medicine. Oncologists, pediatricians, and neurologists are among the many specialists in the medical field.

Subscriber: The subscriber is the individual covered under a group policy. For instance, an employee of a company with a group health policy would be one of many subscribers on that policy.

Superbill: A document used by healthcare staff and physicians to write down information about a patient receiving care. The superbill can contain demographic information, insurance information, and especially any diagnoses or healthcare plans written by the physician. A medical billing specialist inputs the information on a patient’s superbill into a claim.

Supplemental Insurance: Supplemental insurance can be a secondary policy or another insurance company that covers a patient’s healthcare costs after receiving coverage from their primary insurance. Supplemental insurance policies typically help patients cover expensive deductibles and copays.

T

Treatment Authorization Request (TAR): A unique number the insurance company gives the provider for billing purposes. A provider must receive the insurance company’s TAR number before administering healthcare to a patient covered by the company.

Taxonomy Code: Medical billing specialists utilize this unique codeset for identifying a healthcare provider’s specialty field.

Term Date: The end date for an insurance policy contract, or the date after which a person no longer receives or is no longer eligible for health insurance with company. Term dates are typically determined on a case-by-case basis.

Tertiary Insurance Claim: A claim filed by a provider after they have filed claims for primary and secondary health insurance coverage on behalf of a patient. Tertiary insurance claims often cover the remaining healthcare costs such as deductibles and co-pays left over after the primary and secondary claims have been processed.

Third Party Administrator (TPA): The name for the organization or individual that manages healthcare group benefits, claims, and administrative duties on behalf of a group plan or a company with a group plan.

Tax Identification Number (TIN): A unique number a patient or a company may have to produce for billing purposes in order to receive healthcare from a provider. The TIN is also known as the employment identification number (EIN).

Triple Option Plan (TOP): Also referred to as the cafeteria plan, this plan gives an enrolled individual the options to choose between an HMO, a PPO, or a traditional point of service plan for their health insurance. Some companies offer triple option plans to their employees to accommodate the needs of a diverse staff.

Type of Service (TOS): A field on a claim for describing what kind of healthcare services or procedures a provider administered.

TRICARE: TRICARE is the federal health insurance plan for active service members, retired service members, and their families, in addition to survivors of service members. TRICARE was previously known as CHAMPUS.