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 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 basic terms, definitions - capitation fee, covered services, dependent, emergency Medical condition

“Capitation Fee” means the monthly payment made by CarePlus to the Provider for each Enrollee assigned to Provider. The amount of the Capitation Fee is set forth in the PCP Agreement.

“Clean Claim” is a claim that has no defect or impropriety, including lack of required

substantiating documentation for non-contracted providers and suppliers, or particular circumstances requiring special treatment that prevents timely payment from being made on the claim. A claim is “clean” even if CarePlus refers it to a medical specialist for examination. If additional documentation in the medical record involves a source outside CarePlus, the claim will not be considered “clean”.

“Copayment” means the amount required to be paid by Member to Provider as additional payments

for Covered Services as are Medically Necessary and shall include fixed payments to be paid as well as percentage amounts based on the cost of a service (i.e. “co-insurance”). Copayments will vary in amount for Members, depending on benefit structure

“Covered Services” means those medical and hospital services that are expressly covered under any Subscriber Certificate and are medically necessary as determined by CarePlus’ Medical Director