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 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.