GLOSSARY of Medical Billing terms
TRUSTED. SECURE. COMPLIANT.
HIPAA-Compliant. SOC 2 Type II audit in progress.
CHB operates under HIPAA-compliant workflow and is being independently audited under the SOC 2 Type II framework. Your patient data stays protected.
A
Account Number: The number assigned by your provider (hospital, physician, home care service, etc.) when medical services were provided.
Accounts Receivable (AR): The total amount of money owed to a healthcare provider for services rendered that has not yet been paid by patients or insurance companies. Let us boost your revenue cycle with our AR services.
Adjudication: The process by which an insurance payer reviews a claim and determines the amount of payment, if any, to be made.
Adjustment: The portion of your bill that your provider has agreed to write off.
Admission date (admit date): The date admitted for treatment.
Admitting Diagnosis: Words or phrases your doctor uses to describe your condition.
Advance Beneficiary Notice (ABN): A notice that a provider or facility should give a plan beneficiary to sign in special cases: Your doctor gives you a service that he or she believes that the plan may not consider medically necessary; and your doctor gives you a service for which they believe the plan will not pay. The ABN may also be referred to as a waiver.
Algorithmic Downcoding: The practice of payers to use AI to scan clinical notes and auto deny or downcode for medical necessity.
Allowed Amount: The maximum amount an insurance company will pay for a covered healthcare service. Also known as the allowable charge, eligible expense, or negotiated rate.
Ambulatory Surgery: Outpatient surgery or surgery that does not require an overnight hospital stay.
Amount Not Covered: What your insurance company does not pay, including deductibles, co-insurances and charges for non-covered services.
Ancillary Service: The inpatient services you receive beyond room and board charges, such as laboratory tests, therapy, surgery, etc.
Appeal Process: The process you use when you disagree with a decision about the health care process, service or payment.
If the participant is in a managed care plan, they can file an appeal if the plan will not pay for, does not allow, or stops a service that the patient or provider believes should be covered or provided. Plans usually have special protocols to follow in order to file an appeal. Check the plan’s membership materials or contact the plan for details about appeal rights and procedures.
Applied to Deductible: A portion of your bill, as defined by your insurance company, that you owe your provider.
AR Days: the average number of days it takes a business or medical practice to collect payments after a sale or service is rendered.
Assignment: A process where a plan or payor pays its share of the allowed charge directly to the physician or
supplier.
Assignment of Benefits: An agreement you sign that allows your insurance to pay the provider directly.
Attending Physician: The doctor who orders your treatment and who is responsible for your care.
Authorization Number: A number stating that your treatment has been approved by your insurance plan. Also called a Certification Number, Prior Authorization Number or Treatment Authorization Number.
Automated Adjudication: Using AI to review and make a determination on a medical claim.
B
Balance Billing: The practice of billing a patient for the difference between the provider’s charge and the insurance company’s allowed amount.
Beneficiary: The person who is eligible to receive benefits through a health insurance program.
Beneficiary Eligibility Verification: A way providers can retrieve information about whether you have insurance coverage.
Benefits: The money or services provided and covered under an insurance policy.
Benefit Contract: The legal agreement between a health plan and you. This contract establishes the full range of benefits available to you through your healthcare plan. A Benefits Contract is also sometimes referred to as a certificate of coverage or evidence of coverage.
Bill/Invoice/Statement: A printed summary of your medical bill.
Bill Type 111: A Medicare/UB-04 code for Hospital Inpatient (Part A) Admit-Through-Discharge claims. It covers the entire stay, from admission to discharge, for inpatient services, often used for acute care or general medical/surgical stays, including private room and board (Revenue Code 011).
Billable CPT Codes: 5-digit numeric codes maintained by the AMA to standardize medical, surgical, and diagnostic services for insurance reimbursement.
Brand-name Drug: Drugs made and sold by a major drug company. Brand-name drugs may or may not be listed on a formulary. For any health need, there may be competing drugs from different companies. Your health plan formulary may list a specific brand-name drug if a price agreement has been made with that company. This brand-name drug will cost more than the generic version, but cost less than other brand-name drugs that are not on the formulary. If you buy brand-name drugs that are not on the formulary, you often pay more because your health plan pays more.
Bundling: The practice of combining multiple healthcare services into a single payment or charge.
C
Capitation: A payment method for health care services. The physician, hospital, or other health care provider is paid a contracted rate for each member assigned, referred to as “per-member-per month” rate, regardless of the number or nature of services provided. The contractual rates are usually adjusted for age, gender, illness, and regional differences.
Carrier: An entity that may underwrite or administer a range of health benefit programs. May refer to an insurer or a managed health plan.
Cash Basis: The actual charge of the service when the service was performed.
Centers for Medicare and Medicaid Services (CMS): The federal agency that runs the Medicare program. In addition, CMS works with the States to run the Medicaid program. CMS works to make sure that the beneficiaries in these programs are able to get
high quality health care. CMS is responsible for oversight of HIPAA administrative simplification transaction and code sets, health identifiers, and security standards. CMS also maintains the HCPCS medical code set and the Medicare Remittance Advice Remark Codes administrative code set.
Certification: The official authorization for use of services.
Certification Number: A number stating that your treatment has been approved by your insurance plan. Also called an Authorization Number, Prior Authorization Number or Treatment Authorization Number.
Charge Entry: When coded clinical services (CPT, ICD-10, HCPCS) are entered into a Practice Management system to create billable claims. Occurring between coding and submission, this step ensures accurate provider reimbursement, reduces claim denials, and verifies that all rendered services are properly documented for payers.
Charge Lag: The time elapsed between service delivery and charge entry; lower lag improves cash flow and reduces errors.
Claim: A request for payment submitted to an insurance company by a healthcare provider for services rendered to a patient. Ensure accurate claim submissions with our Medical Billing Services.
Claim in Progress: When an insurance provider has received a bill for services and is actively reviewing, adjudicating, or verifying it before issuing payment. The process involves checking patient eligibility, network status, medical necessity, and contract rates.
Claim Number: A number assigned by your insurance company to an individual claim.
Claim Submission: When providers or third-party billers send patient service documentation (coded with CPT/ICD-10) to insurers for reimbursement. It involves patient registration, insurance verification, coding, and submission via electronic clearinghouses or paper forms to ensure accurate, timely payment
Clean Claim Rate: The percentage of claims processed on the first submission without rejections or errors.
Clearinghouse Healthcare: A secure, third-party intermediary that standardizes and transmits electronic claims between healthcare providers and insurance payers. They “scrub” claims for errors to reduce rejections, translate non-standard data into compliant formats (HIPAA 837/835), and expedite payment turnaround times, acting as a crucial link in the revenue cycle
Clinical Research, Clinical Trial or Research Study: Research conducted to evaluate the safety and/or effectiveness of a treatment, diagnostic procedure, preventive measure or similar medical intervention by testing the intervention on patients in a clinical setting. Participation in clinical research is voluntary. The informed consent form discusses who will pay the costs of services that are part of the clinical trial. Each study is different, but in many cases insurance will pay for medically necessary services that are part of the research study. Sometimes research services are paid for by the study. Check with your insurance plan or the study team to determine coverage.
CMS 1500 Form: The standard paper form used by healthcare professionals and suppliers to bill insurance companies.
CMS Certification: the approval granted to healthcare providers, suppliers, and facilities by the Centers for Medicare & Medicaid Services (CMS) to participate in Medicare/Medicaid programs. Key certifications include CLIA for laboratory testing, provider/supplier certification for safety standards, and specialized certifications like diabetes education.
COBRA: A federal law that protects employees and their families in certain situations by allowing them to keep their existing health insurance for a specified amount of time. COBRA provides certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates. The individual must pay the premium cost to keep his/her insurance plan, but the costs are usually less expensive than individual health coverage.
Coder (Medical): Certified healthcare professionals who translate patient records—diagnoses, procedures, and services—into standardized, universal codes (ICD-10-CM, CPT, HCPCS Level II) for insurance reimbursement, billing, and research.
Coding of Claims: Translating clinical information from your medical record into numbers (such as diagnosis and procedure codes) that insurance companies use to pay claims.
Coinsurance: The percentage of the cost of a healthcare service that a patient is responsible for paying after the deductible has been met.
Colored Ink: Ink used on medical forms for specific compliance purposes. For form filling, dark Blue or black ink from a ballpoint pen is preferred to prevent smudging and improve reproducibility. Other colored ink can be used for notes or corrections, with many hospitals using a colored ink coding system for shift identification.
Commercial Insurance Plan: Commercial health insurance is typically an employer-sponsored or privately purchased insurance plan. Commercial plans are not maintained or provided by any government-run program. Commercial policies can be sold individually or as part of a group plan
Confidentiality: The ability to speak with the provider or representative without disclosing the information to an uninterested party.
Consent for Treatment: An agreement you sign that gives you permission to receive medical services or treatment from doctors or hospitals
Coordination of Benefits (COB): A process that applies when determining which plan or insurance policy will pay first if multiple policies exist.
Copayment (co-pay): The set amount, usually $5 to $25, an HMO member pays the provider for services. Unlike coinsurance,
this amount is not based on a percentage of the actual cost of services, but is pre-determined.
Covered Days: The days that your insurance company pays for in full or in part.
Covered Services: A health service or item that is included in the benefit plan and that is paid for either partially or fully.
CPT (Current Procedural Terminology) Code: A 5-digit numbering system that helps standardize professional and outpatient facility billing. There is a CPT code for certain types of medical services. Using this code allows healthcare providers and insurance companies to communicate and track billing more efficiently.
Credentialing: The process of assessing, verifying, and validating a medical professional’s qualifications, education, and experience to ensure they meet established standards.
D
Date of Bill: Bill preparation date. It is not the same date as the date of service.
Date of Service (DOS): Treatment date.
Deductible: The dollar amount that a member must pay for medical services before health plan coverage begins.
Demographic Data: Data that describe the characteristics of the beneficiary and/or guarantor. Demographic data include
but are not limited to age, sex, race/ethnicity, and primary language.
Denials: A refusal by an insurance company to pay for a healthcare service, often due to errors in the claim or lack of coverage.
Denial Management Services: Services that identify, analyze, and appeal denied medical claims to maximize revenue, reduce administrative burdens, and prevent future payment delays.
Denial Rate: The percentage of claims denied by payers, ideally kept below 5%
Department of Health and Human Services (DHHS): DHHS administers many of the “social” programs at the Federal level dealing with the health and welfare of the citizens of the United States. It is the “parent” of CMS.
Determination: A decision made to either pay in full, pay in part, or deny a claim.
Diagnosis Code: ICD-9-CM diagnosis code sets that correspond to conditions that (co)existed at the time of treatment.
Diagnosis-related Groups (DRGs): A payment system used by many insurance companies for inpatient hospital bills. This system categorizes illnesses and medical procedures into groups. Hospitals are paid a fixed amount for each admission.
Discharge Hour: The time a patient is discharged from the hospital.
Disclosure: Release or divulgence of information by an entity to persons or organizations outside of that entity.
Discount: The dollar amount removed from your bill, usually because of a contract between your provider and your insurance company.
Dis-enroll: Ending health care coverage with a health plan.
Dispute Claim: The process of formally challenging the validity of a medical bill, or challenging the denial of payment of a medical bill.
Downcoding: When an insurer or payer changes a submitted claim to a lower-paying code than the provider billed, meaning a lower reimbursement for less complex care than performed, often due to alleged insufficient documentation or algorithmic adjustments, reducing provider revenue and potentially impacting patient care
Drugs/self-Administered: Drugs that do not require administration from doctors or nurses. Your insurance plan may not cover these when provided as part of an outpatient service.
Due From Insurance: The amount your insurance company has agreed to pay.
Due From Patient: The amount you owe.
Durable Medical Equipment (DME): The medical equipment that can be used many times, or special equipment ordered by your doctor, usually for use at home.
E
Effective Date: The date on which health plan coverage begins.
EGD: Short for Esophagogastroduodenoscopy, an upper endoscopy, is a 10-to-20-minute, minimally invasive procedure used to examine and treat conditions of the upper digestive tract (esophagus, stomach, and duodenum) using a flexible camera scope.
Electronic Health Records (EHR): Comprehensive, digital versions of a patient’s medical histroy, integreating demographics, diagnoses medications, treatments, lab results, and imaging, designed to be shared securely across different providers to offer a complete view of a patient’s health journey, improve care coordination, and streamline workflows.
Electronic Medical Records (EMR): Digital Versions of a patient’s chart within a single practice, containing medical history, diagnoses, medications and treatment plans.
Eligibility: Refers to the process whereby an individual is determined to be eligible for health care coverage through their plan.
Eligibility Date: The date on which health plan coverage begins.
Eligible Payment Amount: The medical services covered by an insurance company.
Emergency Care: Care provided in a hospital Emergency Department.
Emergency Department: The part of a hospital that treats patients with emergency or urgent medical problems.
Emergent: Typically an unplanned visit requiring care in the emergency department that may extend to an inpatient stay. In some instances, it may be an inpatient visit where the patient was previously seen elsewhere and requires immediate care at a higher level or specialty service.
Enroll: To join a health plan.
Enrollee: A person who is covered by health insurance.
ERA: Electronic Remittance Advice is a digital document from a health plan to a provider explaining how a claim was processed, detailing payments, adjustments, and denials. It serves as the electronic version of an Explanation of Benefits (EOB), allowing for automated, faster payment posting in medical billing software, which improves cash flow and reduces manual errors.
Estimated Amount Due: The amount the provider estimates you or your insurance company owes.
Exclusive Provider Organization (EPO): These health insurance plans do not require patients to choose a primary care physician or obtain a referral to see a specialist but often have a limited network of providers. Typically, there are no benefits for services from out-of-network providers.
Experimental or investigational treatments: A drug, device, diagnostic procedure, treatment, preventive measure or similar medical intervention that is not yet proven to be medically safe and/or effective. Services considered to be investigational are typically not covered by health insurance. If offered as part of a clinical research study, the study itself may cover the costs. Check with your insurance plan or study team if applicable to see if coverage is available for experimental or investigational treatments.
Explanation of Benefits (EOB): A statement from an insurance company detailing what services were covered, the amount paid, and any patient responsibility.
F
Fee Schedule: A list of services and their respective charge
Fee-for-Services: A method of paying the provider for service or treatment based on the fee schedule.
Financial Assistance Program: Free or reduced rates for care provided to patients with demonstrated financial hardship.
Financial Responsibility: The amount of your bill you have to pay.
Flexible Spending Account (FSA or flex account): An employee benefit that allows a fixed amount of pre-tax wages to be set aside for qualified expenses. Qualified expenses generally include out-of-pocket medical expenses. The amount set aside must be decided in advance and employees lose any unused dollars in the account at the end of the year.
Formulary: A list of preferred prescription medicines. The formulary sorts drugs into groups, or tiers, based on how much of the costs your health plan will pay and how much you have to pay.
G
Generic Drug: Drugs with proven benefits that cost less because they are not made by major drug companies and do not carry brand names. In almost all cases, you pay the least out of pocket for drugs in this group. Not all drugs have generic options.
Global Calculator Surgery: A tabulation tool that allows billers and administrators to calculate the correct global period and last date to accurately code and submit based on the type of surgery performed.
Group NPI: Type II NPI, a unique 10-digit number assigned to healthcare organizations, such as group practices, hospitals, or clinics, to identify them in administrative and financial transactions.
Group Number: Your group number on your insurance card identifies your employer’s specific plan, helping providers bill correctly and distinguishing your benefits from other plans offered by the insurer, often found on the front near your Member ID, but not present on individual plans like Original Medicare.
Guarantor: The person responsible for payment of rendered services. The guarantor is customarily the person bringing the patient in for treatment. This person is not necessarily the same as the subscriber
H
Healthcare Payment System: A framework—ranging from digital software platforms to reimbursement methodologies—that manages the flow of money between patients, providers, and payers. These systems, including models like fee-for-service, capitation, or prospective payment systems (PPS), dictate how providers are reimbursed for services, aiming to improve efficiency, reduce operational overhead, and ensure compliance with financial and medical regulations
Healthcare common procedure coding (HCPC): A five-digit numbering system that helps standardize professional and outpatient facility billing. There is a HCPC code for certain types of medical services. Using this code allows healthcare providers and insurance companies to communicate and track billing more efficiently.
Healthcare Provider: A person who is trained and licensed to give health care.
Healthcare Revenue Cycle Management Services: Specialized service to manage and improve the revenue cycle for healthcare companies. This is achieved through more-detailed and accurate coding, faster charting, timely filing, faster payment posting, and swift denial follow-up.
Healthcare Revenue Cycle Manager: Role responsible for implementing and overseeing workflows designed to improve the revenue cycle for healthcare companies, either in-house or via a third-party service.
Health Insurance Portability and Accountability Act (HIPAA): HIPAA is the Health Insurance Portability and Accountability Act signed into law in 1996. An Administrative Simplification section in the law requires adoption of standards for security, privacy and
electronic healthcare transactions.
Health Maintenance Organization (HMO): A legal corporation that provides health care in return for pre-set monthly payments. For most HMOs, members must use the physicians, hospitals and other health care professionals in the HMO’s network in order to be covered for their care. There are several models of HMO, including the Staff Model, Group Model, IPA Model, Direct Contract Model and Mixed Model.
Health Plan: An entity that assumes the risk of paying for medical treatments, i.e. uninsured patient, self-insured
employer, payer, or HMO.
HIPAA: The federal Health Insurance Portability and Accountability Act sets standards for protecting the privacy of your health information.
HIPAA Compliant: Certified to meet or exceed the guidelines outlined in the federal Health Insurance Portability and Accountability Act.
High Deductible Health Plan (HDHP): A high deductible health plan (HDHP) with a health savings account (HSA) provides medical coverage and a tax-free way to save for future medical expenses. A high deductible health plan does not usually cover healthcare costs until the deductible has been met, which means you will be responsible for healthcare costs out-of-pocket until you meet your deductible. Once the deductible has been met, eligible healthcare expenses will be covered by the plan.
Home Health Agency: An agency that treats patients in their homes.
Hospice: The group that offers inpatient, outpatient and home healthcare for terminally ill patients.
Hospital-based Billing: This refers to the charges for services rendered in a hospital outpatient clinic or department.
Hospital charge: The amount of money the hospital charges for a particular medical service or supply.
I
ICD: International classification of diseases codes are alphanumeric codes representing diagnoses, symptoms, and conditions, crucial for establishing medical necessity, streamlining claims, tracking diseases, and supporting research, with ICD-10-CM being the current standard for diagnoses and ICD-10-PCS for inpatient procedures, allowing precise justification for healthcare services to insurers.
In Network: The patient is seeking services through their insurer’s designated preferred provider. The patient/guarantor will receive maximum benefits if care is received from an in network provider. UW Medicine is contracted with this insurer.
Incident-to-billing: allows Medicare-covered services provided by non-physician practitioners (NPPs), such as PAs or NPs, to be billed under a supervising physician’s NPI for 100% reimbursement, rather than the 85% rate. It requires the physician to initiate the treatment plan, remain actively involved, and provide direct, on-site supervision in an office setting.
Incremental nursing charge: The charges for nursing services added to basic room and board charges.
Indemnity: A form of coverage offered by most traditional insurers.
Individual Insurance: Health insurance purchased by an individual, not as part of a group plan.
Individual NPI: Type I NPI, a unique, 10-digit identification number assigned to health care providers who are individuals (physicians, nurses, dentists, etc.) for billing and HIPAA compliance.
Institutional Claim: A healthcare bill submitted by a facility for patient services, covering the facility’s costs for rooms, equipment, nursing, labs, and supplies, using the UB-04 form.
Insurance Code: Standardized codes used by providers and insurers for billing, claims, and identifying plan types. They help translate services and policies into a universal language for processing.
Insurance Credentialing Company: A company that helps healthcare providers get enrolled with insurance networks (payers), and handling renewals to boost revenue and patient access.
Insurance Credentialing Services: A service that helps healthcare providers get enrolled with insurance networks (payers), and handling renewals.
Insurance Plan Name: Insurance plan names often combine the insurer’s name, the network type (HMO, PPO, EPO), and a metal level (Bronze, Silver, Gold) or unique product name. These names (e.g., “Aetna Choice POS II”) indicate network flexibility, referral requirements, and cost-sharing structures.
Insurance Verification: The process of confirming a patient’s active insurance coverage, benefits, and eligibility to ensure accurate billing, reduce denied claims, and verify in-network status. It involves checking deductibles, co-pays, and policy limits, typically conducted by contacting the insurer or using automated software.
Insurance Waivers: The services excluded from your insurance policy, such as cancer care or obstetric/gynecologic or pre-existing conditions.
Insured Group Name: The name of the group or insurance plan that insures you, usually an employer.
Insured Group Number: A number that your insurance company uses to identify the group under which you are insured.
Insured’s Name (beneficiary): The name of the insured person, who is also referred to as the member.
Intensive Care: The medical or surgical care unit in a hospital that provides care for patients who need more care than a general medical or surgical unit can provide.
International Classification of Diseases, 10th edition (ICD-10-CM): ICD-10-CM is the official system of assigning codes to diagnoses and procedures associated with hospital utilization in the United States.
Invoice/bill/statement: A printed summary of your medical bill.
L
Liability: The person or persons liable or under obligation for the bill.
Lifetime Maximum Coverage: The Affordable Care Act prohibits health plans from putting annual or lifetime dollar limits on most benefits you receive. Plans can put an annual dollar limit and a lifetime dollar limit on spending for healthcare services that are not considered essential health benefits. The essential health benefits include at least the following:
- Outpatient services
- Emergency services
- Hospitalization
- Pregnancy, maternity and newborn care
- Mental health
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Lab services
- Preventative and wellness services
- Pediatric services
Grandfathered individual health insurance policies are not required to follow the rules on annual limits. Grandfathered plans are those that were in existence on March 23, 2010 and haven’t been changed in ways that substantially cut benefits or increase costs for consumers. Insurers must notify consumers with these policies that have a grandfathered plan.
Locum Tenens: Locum tenens meaning “hold the place of” is used in healthcare when a medical professional is temporarily filling in for someone else. These providers have to be fully licensed in the state they’re working in and have their own National Provider Identifier (NPI). Unlike regular staff, they usually don’t bill insurance themselves. Instead, the clinic or hospital bills under the regular doctor’s name, while noting that the locum was the one providing care.
Long-term Care: The care received in a nursing home.
M
Managed Care: An HMO, PPOs and some forms of indemnity insurance coverage that incorporate preadmission certification and other utilization controls.
Managed Care Organization (MCO): A health plan that provides coordinated health care through a network of primary care physicians and hospitals for pre-set monthly payments.
MD Specialties: Areas of medical expertise focusing on parts of the body or specific medical conditions.
Medicaid: Medical Assistance is a joint federal and state program to cover medical costs for qualifying low-income
individual. Medicaid programs vary from state to state.
Medicaid Spend-down: Medicaid spend-down allows individuals with income or assets above state limits to qualify for Medicaid by “spending down” the excess on medical expenses, often referred to as the Medically Needy Program. This program enables those with high medical bills relative to their income to become eligible once they hit a specific, state-determined threshold.
Medical Bill Advocate: Specialists who review, negotiate, and resolve complex medical bills to reduce or eliminate patient debt. They check for billing errors, negotiate lower rates with providers, and assist with insurance claims, often saving clients significant money.
Medical Biller: A healthcare industry professional who specializes in medical billing, coding, credentialing, prior authorizations, denials, and revenue cycle management. Medical Billers can be employed by medical practices, third-party medical billing companies, or freelance on their own.
Medical Billing: The tasks and industry relating to charting doctors notes and services into a standard bill for submittal to payers (insurance companies, government entities, and individual payers)
Medical Billing and Coding Services: Services that manage the revenue cycle for healthcare providers by translating patient services into standardized codes (CPT, ICD-10) and submitting insurance claims. They also follow up when claims are denied, and often assist with prior-authorizations and credentialling.
Medical Billing Code: Standardized five-digit or alphanumeric systems used to report medical services, procedures, and diagnoses to insurers for reimbursement.
Medical Billing Company: A specialized company that offers medical billing services, typically outperforming in-house billing teams in clean claims submission, revenue recovered, and successful denial recovery
Medical Billing Company Near Me: A popular search term for medical practices looking for third-party billing companies that are located near the practice’s facility.
Medical Billing Firm: A specialized company that offers medical billing services, typically outperforming in-house billing teams in clean claims submission, revenue recovered, and successful denial recovery.
Medical Billing Services: The administrative process of translating healthcare services into insurance claims, submitting them to payers, and managing the revenue cycle to ensure provider reimbursement. These services involve verifying patient eligibility, coding, claim scrubbing for accuracy, submitting claims (CMS-1500 or UB-04), and managing denials or patient collections.
Medical Billing Solutions: Options for managing a medical practice’s billing, including in-house, in-house automated, Third-party, Third-party Automated, Cash pay, or medical billing advocate.
Medical Billing Time Limits by State: Each states unique designated start date and time window in which medical claims can legally be submitted.
Medical Claim: A formal and standardized bill submitted by a medical practitioner to a medical insurer for approval and payment.
Medical Claims Clearinghouse: A secure, third-party intermediary between healthcare providers and insurance payers, auditing and formatting electronic claims to ensure accuracy and compliance before submission. They function as a digital “gatekeeper,” scrubbing claims for errors to reduce denials, accelerate reimbursement, and ensure HIPAA-compliant data exchange.
Medical Coder: Certified healthcare professionals who translate patient records—diagnoses, procedures, and services—into standardized, universal codes (ICD-10-CM, CPT®, HCPCS Level II) for insurance reimbursement, billing, and research.
Medical Reimbursement: The process where a patient pays for medical services upfront and is later repaid by their insurance company, or when an employer reimburses employees for out-of-pocket health expenses via an HRA.
Medically Necessary: Services or supplies that: are proper and needed for the diagnosis, or treatment of your medical condition; are provided for the diagnosis, direct care, and treatment of your medical condition; meet the standards of good medical practice in the local area; and are not mainly for the convenience of the patient or provider.
Medicare Assignment: Providers who have accepted Medicare patients and agreed not to charge them more than Medicare has approved.
Medicare Number: A Medicare card with a unique number is assigned to each person covered under Medicare. The number is used by providers for billing, eligibility and claim status. The Medicare Beneficiary Identifier (MBI) replaces the SSN-based Health Insurance Claim Number (HICN).
Medicare Part A: Usually referred to as Hospital Insurance, it helps pay for inpatient care in hospitals and hospices, as well as some skilled nursing costs.
Medicare Part B: Assists with paying for doctor services, outpatient care and other medical services not paid for by Medicare Part A.
Medicare Summary Notice (MSN): A statement that Medicare sends to you after they process a claim from a provider for services provided to you. Also called an Explanation of Medicare Benefits (EOMB). The EOMB lists the amount billed, the allowed amount, the amount paid to the provider and any copayment, deductible or co-insurance due from you. The EOMB may detail the medical benefits activity of an individual or family.
Medicare Time Filing: The window of time practices have to file a Medicare claim, starting from date-of service. Medicare Administrative Contractor (MAC) no later than 12 months (one calendar year) after the date the services were provided.
Medigap Policy: A Medicare supplement insurance policy sold by private insurance companies to fill “gaps” in Original
Medicare Plan coverage.
Member: An eligible employee or eligible retiree who, through his or her place of employment, has enrolled in a health plan.
Member ID: a unique identification number assigned by an insurer to each person covered under a health insurance policy. Located on the member ID card, it serves as proof of insurance, enabling providers to verify coverage, check eligibility, and process claims.
MIPS (Merit-Based Incentive Payment System): a Medicare program under MACRA that scores eligible clinicians on performance in four areas—Quality, Cost, Improvement Activities, and Promoting Interoperability (EHR use)—to adjust Medicare Part B payments, incentivizing high-quality, value-based care by rewarding top performers with bonuses and penalizing underperformers with cuts, aiming to improve patient outcomes and system efficiency
Mixed Remainders: Time left over after therapy care sessions have been tabulated into 15 minute units that can be combined and applied to the service of longest duration, under proper usage.
Modifier: A two character code (numeric, alphabetic, or alpha-numeric), clarifying circumstances like anatomical location, if a service was partial, or if multiple procedures occurred, ensuring accurate billing, proper reimbursement, and preventing claim denials by giving payers more specific context.
N
National Provider ID: See NPI number.
Net Collection Ratio: a critical healthcare metric measuring the percentage of allowed revenue actually collected after contractual adjustments. Calculated by dividing total payments received by total charges – contractual adjustments, then multiplying by 100.
Network: A group of health care providers and suppliers of other goods and services to provide service to patients.
NLP: AI task of Natural Language Processing used to scan clinical notes and other documentation and transcribe for medical billing, coding, prior authorizations, and denial appeal automation.
No Surprises Act: Enacted 12.27.2020, and effective 1.1.2022 protects patients with health insurance from unexpected, high-cost medical bills. It prohibits balance billing for most emergency services, certain non-emergency services at in-network facilities, and air ambulance services. Patients pay only in-network cost-sharing amounts.
Non-Billable CPT Codes: CPT codes and services not reimbursable by insurance, often representing administrative, supportive, or excluded activities, such as leaving messages, copying records, or, in some cases, specific preventative screenings (e.g., certain immunizations) or services exceeding time thresholds.
Non-covered Service: The service (a) does not meet the requirements of a benefit and (b) may not be considered reasonable
and necessary.
Non-emergent/post Stabilization: Typically a planned visit or service
Non-participating Physician: A provider that is not contracted or accepts assignment with a particular plan.
NPI number: A unique and permanent 10-digit identification number given to both individuals and organizations that are healthcare providers. There are two types of NPI numbers:
- Type 1: Individuals like doctors, physicians, nurse practitioners, and sole proprietors are each given a single NPI
- Type 2: Health care organizations, such as hospitals, pharmacies, and physician groups, are eligible for multiple NPI numbers to cover subparts, or different parts of their organization that are distinctly different from the whole. This includes different departments in a hospital, a different physical location or campus of an organization, or branches of home health agencies.
Individuals who run their own business are given an individual NPI number for themselves and one for their business.
Nurse Practitioner: A nurse who has advanced training and assists physicians by providing care to patients in their absence.
NPs are considered providers.
O
Observation: A hospital outpatient service ordered by a physician when the physician isn’t yet sure that you will need inpatient hospital care, but feels you need outpatient monitoring at the hospital in the meantime
OCE: Outpatient Code Editor is a system created by Medicare to review outpatient hospital claims. It checks whether the claim follows outpatient billing rules before payment is calculated, by:
- It checks whether procedure codes are valid for outpatient billing
- It reviews diagnosis codes to see if they support the services billed
- Modifiers are verified for correctness and proper usage.
- It applies bundling rules and unit limits
- Payment groups are assigned when required for accurate reimbursement.
Out-of-Network: Healthcare providers or facilities that do not have a contract with a patient’s insurance plan, often resulting in higher out-of-pocket costs for the patient.
Out-of-Pocket Costs: Health care expenses that the patient is responsible for as they are not fully or partially covered by their
plan.
Out-of-pocket Maximum: The most money you will have to pay before your insurance company covers all costs. Each plan sets a dollar limit for the calendar year. Once that limit is reached, the plan will pay 100% of the allowed amount for eligible charges for the rest of the calendar year. Some insurance companies do not include certain costs in this limit, such as fertility treatments or prescription drugs. Other insurance companies increase the out-of-pocket maximum for care provided by out-of-network providers.
Outsource Medical Billing: Hiring a medical billing company that is not directly affiliated with your specific medical practice to compile, submit, and resolve denials associated with your practice’s medical claims, also known as third-party billing.
Over-the-counter Drug: Drugs that do not require a prescription. They can be bought at a pharmacy or drugstore and be dispensed to patients, while at the hospital or doctor’s office.
P
Paid to Provider: The amount the insurance company pays to your medical provider.
Paid to You: The amount the insurance company pays to you or your guarantor.
Participating Physician or Supplier: A provider who agrees to accept assignment on the claims. These providers should only initially bill for the patient’s cost share amount.
Patient Collections: Process of managing the billing, invoicing, and payment process for patient-responsible healthcare costs, often involving insurance verification at registration to estimate out-of-pocket, co-pay, or deductible amounts.
Patient Responsibility: The portion of healthcare costs that a patient is responsible for paying, including deductibles, copayments, and coinsurance.
Pay This Amount: The amount you owe toward your medical bill.
Payer: Insurance company.
Payer Eligibility: The administrative process of confirming a patient’s health insurance coverage—including active status, benefits, co-pays, and deductibles—with the insurer before providing medical services. This process reduces claim denials, prevents revenue loss, and secures accurate patient billing by validating details through online portals, phone calls, or clearinghouses.
Payer Variance: The financial difference between the expected reimbursement (based on contract terms) and the actual amount paid by an insurer, typically resulting in underpayments.
Payment Plan: A financing alternative that schedules lowered-amount payments to make bill payment more affordable.
Payment Posting: The process of recording payments from insurers and patients into billing software, matching them to submitted claims, and updating account balances.
PCP – Primary Care Physician (PCP): A physician, who usually specializes in family practice, general practice, internal medicine or pediatrics, who provides or coordinates patient care.
Physician Practice: A group of doctors, nurses, and physician assistants who work together.
PMS (Practice Management System): The software or system the provider uses for billing, scheduling, ordering supplies, managing client information, and marketing.
POC CNA Charting: The documentation by a certified nursing assistant of an action taken near a patient or resident with the help of technology.
Point of Care CNA: A certified nursing assistant who administers point of care testing.
Point-of-Care Testing: Clinical laboratory testing performed at or near the site where patient care is delivered. Unlike traditional laboratory testing, which may involve delays in sample transport and result reporting, point-of-care testing offers rapid turnaround times that support timely clinical decision-making.
Point of Service (POS): A health plan option that allows members to use either a network provider or a non-network provider at
their discretion. If a member chooses to go out of network, they may pay a higher co-pay or deductible.
POS Code: Two-digit, CMS-maintained numbers used on medical claims to identify where a health service was rendered, such as an office (11), home (12), or hospital (21/22).
Policy Number: A number your insurance company gives you to identify your contract.
Power of Attorney: A power of attorney is a legal document that allows you to appoint another person (called an attorney-in-fact or agent) to act on your behalf and make certain decisions for you. A power of attorney may authorize your agent to make healthcare decisions for you (when you are unable to do so), buy or sell things, manage a business, invest money, cash checks and manage your financial matters generally. Your attorney-in-fact must be over 18 years old and can be a family member, relative, or other trusted person, but cannot be your physician. You may also name multiple attorneys-in-fact in the event your primary attorney-in-fact is unable to fulfill his/her duties. Your power of attorney can be written to either take effect immediately or to take effect at some time in the future and can be written to last either for a limited period of time or indefinitely; your power of attorney ends when you die.
Practice Management: The role of organizing and overseeing all aspects of a medical practice, including: operations, finance, marketing, human resources, and compliance.
Practice Management Software: Software that facilitates, automates, and simplifies tasks associated with practice management.
Practice Management Systems: The policies, procedures, and tools established within a practice that outline, organize, and set operational behavior and goal expectations.
Practice Manager: The medical practice administrator responsible for managing the medical practice.
Pre-admission Approval or Certification: An agreement made by your insurance company and you or your provider, to pay their portion of your medical treatment. Providers ask your insurance company for this approval before providing your medical treatment.
Pre-existing Condition: A medical condition for which the patient has received treatment during a specific period of time prior to enrolling in a new insurance plan. This period (such as 30, 60, 90 days, 6 months, etc.) before enrollment is called the “look-back” period. “Treatment” is defined as receiving medical advice, recommendations, prescription drugs, diagnosis or treatment. Under the Affordable Care Act, pre-existing condition exclusions are no longer allowed, with one exception: For individual plans (not purchased through an employer) that were in existence prior to 2010 and included such an inclusion.
Preferred physicians and/or health care practitioners (providers): The term used to describe the physicians, health care practitioners and facilities included in an insurance plan network.
Preferred Provider Organization (PPO): A network of doctors and hospitals that provide health care services at a pre-negotiated lower price. Members receive better benefits when they use network providers, but have the option to used out-of-network providers for higher out-of-pocket costs.
Premium: The predetermined monthly membership fee a subscriber or employer pays for health plan coverage.
Prepayments: The money you pay before receiving medical care; also referred to as preadmission deposits.
Preventive Care: Care designated to keep the patient healthy or to prevent illness, such as colorectal cancer screening, yearly mammograms, and flu shots.
Primary Care: A basic level of care usually given by doctors who work with general and family medicine, internal medicine (internists), pregnant women (obstetricians), and children (pediatricians). A nurse practitioner (NP), a State licensed registered nurse with special training, can also provide this basic level of health care.
Primary Insurance: An insurance policy, plan, or program that pays first on a claim for medical care, also known as primary payer.
Primary Payer: An insurance policy, plan, or program that pays first on a claim for medical care, also known as primary insurance.
Prior Authorization: The process of receiving authorization from an insurance company to prescribe a medication, order a test, refer a specialist, or schedule a procedure, prior to the work being done, to ensure the insurance company will cover the cost.
Prior Authorization Number: A number stating that your treatment has been approved by your insurance plan. It is also referred to as an Authorization Number, Certification Number or Treatment Authorization Number.
Privileging: The formal process of authorizing a specific, defined scope of clinical services or procedures a practitioner is allowed to perform within a healthcare organization, based on their verified training, experience, and demonstrated competence.
Procedure Code: A code given to medical and surgical procedures and treatments.
Prospective Payment System (PPS): A method of reimbursement in which Medicare payment is made based on a predetermined fixed amount. The payment amount for a particular service is derived based on the classification system of that service. (For example, diagnosis-related groups for inpatient hospital services.)
Protected Health Information (PHI): Individually identifiable health information transmitted or maintained in any form or medium, which is held by a covered entity or its business associate. Identifies the individual or offers a reasonable basis for identification. Is created or received by a covered entity or an employer. Relates to a past, present, or future physical or mental condition, provision of health care or payment for health care.
Provider: Any healthcare provider such as hospital, physician, non-physician provider, laboratory, etc.
that provides medical services.
Provider Contract Discount: A part of your bill that your provider must write off because of billing agreements with your insurance company.
Provider Credentialing Service: A service where a third-party handles all aspects of credentialling for a practice and it’s qualifying practitioners. This includes education, certification, work history, and malpractice status verification.
R
Realized Yield: the percentage of submitted charges actually collected after accounting for contractual adjustments, denials, and write-offs.
Recoupment: When an insurer or payer takes back money they previously paid to a healthcare provider, usually after an audit finds an overpayment due to coding errors, duplicate billing, or documentation issues, often by deducting the amount from future payments.
Referral: The formal process that gives a health plan member authorization to receive care from a provider other than his or her primary care provider. Without a referral, such care may not be covered
Real-time Adjudication: Receiving a review and determination on a medical claim from an insurance payer immediately after the claim has been submitted.
Release of Information: A signed statement from patients or guarantors that allows providers to release medical information so that insurance companies can pay claims.
Remittance Advice: The explanation the hospital receives, usually with payment, from your insurance company after your medical services have been processed.
Responsible Party: The person responsible for paying your hospital bill, usually referred to as the guarantor.
Revenue Code: A billing code used to name a specific room, service or billing sum.
Revenue Cycle: The cycle that outlines the lead time between when a patient receives services and when the payment is posted and the medical practice receives payment for the service.
Revenue Cycle Management (RCM): The comprehensive, end-to-end process that tracks patient financial interactions from initial appointment scheduling to final payment, ensuring providers are reimbursed for services. It integrates clinical and administrative tasks—including patient registration, insurance verification, charge capture, coding, claim submission, and denial management—to maintain financial stability, minimize claim denials, and improve cash flow.
Rule of 8’s: a billing guideline for outpatient therapy services, requiring at least 8 minutes of direct, one-on-one, time-based, skilled treatment to bill for a 15-minute unit. Unlike the Medicare 8-Minute Rule, which sums total time, the Rule of Eights mandates that each service is calculated independently, preventing the combining of mixed remainders.
Rx PCN (Process Control Number): a 1-to-10 digit alphanumeric identifier on a pharmacy insurance card used to route prescription claims to the correct Pharmacy Benefit Manager (PBM)
S
Same-Day Surgery: A surgery performed as an outpatient service.
Secondary Payer: An insurance policy that supplements the primary coverage and pays second on a claim for medical care.
Self-Insurance: Practice of an individual, group of individuals, employer or organization that assumes complete responsibility for losses, which might be insured against, such as health care expenses. In effect, “self-insured” groups have no real insurance against potential losses and instead maintain a fund out of which is paid the contingent liability subject to self-insurance.
Self-Pay: A term to mean that the patient owes the medical bill.
Service Area: A geographic area where insurance plans enroll members. In an HMO, it is also the area served by your doctor network and hospitals.
Service Begin Date: The date your medical services or treatments began.
Service End Date: The date your medical services or treatments ended.
Single-Case Agreement (SCA): A reimbursement agreement entered into between UW Medicine and a patient’s health insurer/payer related to a single patient and limited to a single encounter, episode, or specified period of time.
Skilled Nursing Facility: An inpatient facility in which patients who do not require acute hospital care are provided with nursing care or other therapy.
Social Security Disability Insurance (SSDI): An income assistance program administered by the federal government for those with disabilities. The Social Security Administration (SSA) has its own definition of disability for various illnesses, such as kidney disease or diabetes. The application process can take many months. If approved, the monthly amount you receive is based on how much money you have paid into Social Security through payroll taxes. To be eligible for SSD, your disability must meet 1 of these conditions:
- Have lasted or be expected to last at least 1 year.
- Be permanent.
- Be expected to result in death.
- SSA must consider you disabled for at least 5 months before you start receiving benefits.
Social Security Income (SSI): A disability income program through SSA for disabled people who have not worked enough to pay much into the Social Security System and so are not eligible for SSD. The disability rules are the same as for SSD. However, SSI has strict income and financial limits.
Source of Admission: The source of your admission, whether it is a referral, transfer or through the emergency room.
Specialist: A doctor who specializes in treating certain parts of the body or specific medical conditions. For example, a cardiologist only treats patients with heart problems.
Specialist Referral: A referral to a doctor with specialized expertise in treating certain parts of the body or specific medical conditions, usually requiring a prior-authorization.
Spend Down: A strategic financial process allowing individuals with income or assets exceeding state limits to qualify for benefits by reducing their countable resources to permissible levels, often through paying for medical care.
Statement: A bill that is sent to the patient for services/items provided.
Statement Covers Period: The dates your service or treatment begin and end.
Subscriber: An eligible employee or eligible retiree who, through his or her place of employment, has enrolled in a health plan.
Submitter ID: The identification number (ID) doctors and hospitals use when they bill electronically. Providers get an ID from each insurance company to whom they send claims.
Supplemental Insurance Company: An additional insurance policy that handles claims for deductible and co-insurance reimbursement.
Super-Bill (also referred to as; charge document, fee slip; routing slip; encounter form): An internal document created and used to capture medical charges. The superbill typically contains the most frequently used CPT and ICD codes, patient demographic and insurance information.
T
Termination Date: The date that an agreement expires; or, the date that a subscriber and/or member ceases to be eligible.
Tertiary Insurance: Insurance from a third provider that is available after an insured party’s primary and secondary insurance have been exhausted and there is still cost to be covered, if the insured party has another insurance coverage.
Third-Party Payer (Administrator): An entity (other than the patient or healthcare provider) that pays for healthcare services, such as an insurance company or government program.
Timely Filing: Period of time that the provider has to file a claim. This may vary by insurance carrier. Typically the
filing period is 6 to 12 months.
Transaction: The exchange of information between two parties to carry out financial or administrative activity.
Treatment Authorization Number: A number stating that your treatment has been approved by your insurance plan. It is also referred to as an Authorization Number, Certification Number or Prior Authorization Number.
Tricare: Tricare is a health care program for active duty and retired uniformed service members and their families. If members become eligible for Tricare benefits, they are no longer eligible for ChampVA.
Type of Admission: The reason for your admission, such as emergency, urgent or elective, etc.
U
UB-04 Claim Form: The standard claim form used by institutional providers, like hospitals, to bill insurance companies for medical services.
Units of Service: Measures of medical services a patient received, such as the number of hospital days, pints of blood, treatments or laboratory tests.
Upcoding: a fraudulent billing practice where providers submit codes for more severe diagnoses or complex, expensive procedures than were actually performed to receive higher reimbursements from insurance or government programs.
Usual, Customary and Reasonable (UCR): In general terms, the price charged by the provider. Specifically, a charge for a particular service is considered to be “usual and customary” if it falls within the range of prices charged for the same service by other providers in the same geographical area.
V
Value Based Care Model (VBC): A healthcare delivery model that ties provider payments to patient health outcomes, quality of care, and efficiency,
W
Waiting Period: The amount of time members must wait after enrolling in an insurance plan before they are eligible for certain benefits.
X
X12: A set of standards for electronic data interchange (EDI) used in healthcare transactions, such as claims and remittance advice.
123
8-Minute Rule: a billing guideline for outpatient therapy (PT, OT, Speech) that dictates providers must spend at least 8 minutes on a timed, one-on-one service to bill for one unit, with units typically incrementing in 15-minute blocks (8-22 mins = 1 unit, 23-37 mins = 2 units, etc.). Combined minutes from distinct CPT codes can be divided by 15 to yield remainder time that can bill for additional units for the service that had the longest duration. See 8 minute rule article
403b max contribution: the most you can contribute to a 403 b retirement plan in a given year. A 403 b is a retirement savings plan made for people who work in nonprofit and public organizations. That includes medical billing staff, nurses, techs and anyone working in hospitals or health systems that do not operate for profit.