Medical billing is a also a very important part of Revenue Cycle Management (RCM). The Medical bill is the chief important document for the payment from the payer. The medical billing part includes lot of terminologies which needs to be understood by everyone. These important terms will help you clear give more information about medical billing process and the health insurrance part. 

List of important terms or terminology used in Medical Billing

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

Adjustment
The portion of medical bill that doctor or hospital has agreed not to charge Patient.

Aging
Any claims or unpaid insurance that are due past 30 days.

AMA
American Medical Association. The largest consortium of doctors in the US. Their publication: American Medical Association is a widely distributed medical journal in the world.

Ambulatory Care
It includes all types of health services that do not require an overnight hospital stay.

Ancillary Service
Any service administered in a hospital or other healthcare facility other than room and board, including biometrics tests, physical therapy, and physician consultations among other services.

Appeal
A process by which a doctor or the Patient can object to payer when they disagree with the health plan’s decision not to pay for care provided.

AR
(Accounts Receivables) It’s a term used to indicate outstanding amount of money that the hospital or physician are still hoping to get paid for.

Assignment of Benefits (AOB)
Insurance payments which are sent directly to the patient’s doctor or hospital

Authorization
Approval of care required before a service is provided. Pre-authorization may be necessary before hospital admission, or before care is given by non-HMO providers.

Balance Bill
The amount doctors charge patients have to pay after the patient’s insurance and health plans have paid because the charges are above the Usual and Customary Rate or because the insurer considered a procedure medically unnecessary

Beneficiary
Person or persons covered by the health insurance plan.

Bill/Invoice/Statemen
Printed summary of patients’ medical bill.

Billing
the procedure by which medical bills are collected from insurance companies within hospitals or other healthcare facilities.

Blue Cross and Blue Shield Association (BSBSA)
An association which represents the common interests of Blue Cross and Blue Shield health plans. The BCBSA serves as the administrator for the Health Care Code Maintenance Committee and also helps maintain the HCPCS Level II codes.

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.

CAQH
Council for Affordable Quality Healthcare. A non-profit union of healthcare related organization that governs the collaboration between insurance plans and healthcare providers.

CHAMPUS
Civilian Health and Medical Program of the Uniformed Services. Now known as TRICARE. A federal health insurance for military personnel, National Guard, retirees, their families, and survivors.

Charity Care
Medical care provided at no cost or at low cost to patients who cannot afford it.

Clean Claim
A term used 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
it is a service that checks insurance claims for errors. It helps in minimizing rejected claims by timely correcting the errors. Clearinghouse electronically transmits HIPAA complaint claims to insurance carriers.

CMS
Center for Medicaid and Medicare Services. A Federal agency that governs HIPPA, Medicare, Medicaid and other health programs.

Co-insurance
The cost sharing part of the bill that patient have to pay. For Medicare, the percent of the approved charge that patient have to pay either after patient pay the Part A deductible, or after pay the first $100 deductible each year for Part B.1

COBRA Insurance
A health insurance cover for unemployed individuals and their dependents. Anyone that leaves work voluntarily or involuntarily is covered as long as the reason for leaving is not gross misconduct.

Coding
It involves taking the doctors notes from a patient visit and translating them into the proper ICD-10 code for diagnosis and CPT codes for treatment.

Date of Service
A type of cost sharing whereby the insured person pays a specified flat amount per unit of service or unit of time with the insurer paying the balance

Date of Service (DOS)
The date(s) when patients were treated

Day Sheet
A sum up of treatments provided and daily charges or payments made by the patient.

Deductible
The amount patient must pay for medical services before insurance company begins to pay

Demographics
Physical attributes of a patient that are necessary to fill in a claim. Such as age, sex, height or weight.

Denied claim
Insurance claims submitted to an insurance company in which payment has been rejected due to technical error or because of medical coverage policy issues.

Diagnosis Code
A code used for billing that describes your illness

Dirty Claim
A claim submitted with errors or one that requires manual processing to resolve problems or is rejected for payment

DME
Durable Medical Equipment – Medical equipments such as wheelchairs, oxygen, stretchers, glucose monitors, crutches, etc.

Down-coding
if a claim is submitted by the provider without supporting documents, the insurance company will reduce the code to the closest matching code thereby reducing the payment.

E/M
Evaluation and Management section of the CPT codes

Electronic Claim
Insurance claim submitted electronically

Electronic Funds Transfer (EFT)
An electronic method of transmitting money. A paperless system of debiting or crediting money into an account.

EMR
The electronic record of health-related information on an individual that is created, gathered, managed, and consulted by licensed clinicians and staff from a single organization who are involved in the individual’s health and care

Enrollee
Term used for an individual covered by health insurance

EOB (Explanation of Benefits)
A statement describing medical benefits and account activity, including explanation of why certain claims may or may not have been paid.

ERA
Electronic Remittance Advice. This is an electronic version of EOB. It gives details of insurance claim payments and is designed to comply with HIPAA standards.

ERISA
Employee Retirement Income Security Act of 1974. This law regulates self-insured plans. Its function is to report, discuss grievances, to check appeals procedure and financial standards for group life and health.

eRX
Electronic Prescribing Incentive Program of the Medicare Improvements for Patients and Providers Act of 2008 authorized an incentive program for EPs who are successful electronic prescribers as defined by MIPPA. This incentive program that began on January 1, 2009 is separate from PQRI. Eligible professionals do not need to participate in PQRI to participate in the Electronic Prescribing (eRx) Incentive Program.

Estimated Insurance
An estimation of the money paid by a patient’s insurance company.

Fee Schedule
A listing of the maximum fee which a health plan will pay for services based on CPT billing codes.

Fee-for-Service
Also known as indemnity insurance, FFS is a type of insurance that offers patients a flexibility of choosing the doctor they wish to.

Financial Responsibility
Charges that the patient or the insurance holder is liable to pay.

Formulary
An exhaustive list of costs for prescribed medicines that an insurance company reimburses.

Fraud and Abuse
Fraud: To purposely bill for services that were never given or to bill for a service that has a higher reimbursement than the service produced. Abuse: Payment for items or services that are billed by mistake by providers, but should not be paid for by the insurance plan. This is not the same as fraud.

GPH
Group Health Plan. The coverage provided by an employer to his current and former employees.

Group Name
Name of the insurance plan or group that the patient is insured under.

Group provider number:
A number assigned to a group of physicians submitting insurance claims under the group name and reporting income under one name; used instead of the individual’s physician’s number for the performing provider.

Guarantor
Someone who has agreed to pay the bill.

HCC
Hierarchical Condition Category. These are codes that are taken form ICD-9 and used by Medicare for reimbursements.

HCPCS
A medical code set, which has been selected for use in the HIPAA transactions, identifies health care procedures, equipment, and supplies for claim submission purposes. HCPCS Level I contain numeric CPT codes which are maintained by the AMA. HCPCS Level II contains alphanumeric codes used to identify various items and services that are not included in the CPT medical code set. These are maintained by HCFA, the BCBSA, and the HIAA. HCPCS Level III contains alphanumeric codes that are assigned by Medicaid state agencies to identify additional items and services not included in levels I or II.

Health Insurance Portability and Accountability Act (HIPAA):
This act, which was passed in 1996, helps ensure that privacy is maintained in regards to patients’ medical records. It also created a set of standards to which all electronic medical records must adhere.

Health Maintenance Organization (HMO)
An insurance plan that pays for preventative and other medical services provided by a specific group of participating providers.

HIC
Health Insurance Claim. A Social Security number assigned to a person to classify them as a Medicare beneficiary. This number is essential to process Medicare claims.

HIPAA
Health Insurance Portability and Accountability Act. This federal act sets standards for protecting the privacy of patient’s health information.

HIT
Health Information Technology.

HITECH Act
The preponderance of the HIT aspects of ARRA are found in Title XIII, Division A, Health Information Technology, and in Title IV of Division B, Medicare and Medicaid Health Information Technology. These titles together are referred to as the Health Information Technology for Economic and Clinical Health Act or the HITECH Act.

Hospice
A care home for terminally ill patients.

ICD-9 Codes

ICD-9 codes are an international set of codes that represent diagnoses of patients’ medical conditions as determined by physicians. Medical billing specialists may translate a physician’s diagnoses into ICD-9 codes and then input those codes into a claim for processing

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.

In-Network (or Participating)
A type of insurance plan where the provider signs a contract to become a part of the network.

Incremental Nursing Charge
Charges incurred to cover for nursing services in a hospital.

Indemnity
Also known to as fee-for-service. A type of insurance that allows the patient to use any provider or hospital.

Inpatient (IP)
Patients who stay overnight in the hospital.

Intensive Care
A Hospital care unit that provides care for patients who are extremely ill or need special care.

IPA
Independent Practice Association. An association for physicians that are contracted with a HMO plan.

MAC
Medicare Administrative Contractor. A company that handles Medicare claims and are contracted to do so by the federal government.

Managed Care Organizations (MCOs)
Entities that serve Medicare or Medicaid beneficiaries on a risk basis through a network of employed or affiliated providers. May apply to EPO, HMO, PPO, integrated delivery system, or other weird arrangement, MCOs are usually prepaid group plans, and physicians are typically paid by the capitation method.

Managed Care Plans
An insurance plan that requires patients to see doctors and hospitals that have a contract with the managed care company, except in the case of medical emergencies or urgently needed care if you are out of the plan’s service area.

Maximum Out-of-Pocket
The maximum money you are expected to pay for covered expenses. Once the maximum out-of-pocket has been met, many health plans pay 100% of certain covered expenses.

Med Pay
Is also referred to as Personal Injury Protection (PIP). It is a form of no fault insurance which means that the insurer will cover the medical expenses regardless of whose fault it was in an accident.

Medicaid
An insurance program provided by the US government, providing coverage for low income families or other eligible people.

Medical Billing Specialist
They 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. Enters insurance payment information and processes patient statements and payments. Performs tasks vital to the financial operation of a practice.

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 Necessity
Any medical procedure that is not investigational, cosmetic, or experimental in nature but done to treat an illness or injury.

Medical Record Number
A unique number assigned to every patient by the healthcare provider to identify the patient medical record.

N/C
Non-Covered Charge. Any medical service that a patient’s insurance plan does not cover.

NEC
Not Elsewhere Classifiable. Medical billing terminology that is used while coding if a relevant category in ICD codes is not available.

Network Provider
When a healthcare provider is contracted with an insurer to provide service at a discounted price.

Nonparticipation
A term used to define the procedure when a healthcare provider rejects Medicare approved payment.

NOS
Not Otherwise Specified. A term used to define unspecified diagnosis in ICD.

NPI Number
National Provider Identifier. A unique 10 digit identification number issued by CMS to healthcare providers. This is a HIPAA requirement and assigned through the National Plan and Provider Enumeration System (NPPES).

OIG
Office of Inspector General is a part of department of Health and Human Services. It establishes compliance requirements for billing services and individual and physician practices to reduce healthcare fraud and abuse.

ONC
The position of National Coordinator was created in 2004 through Executive Order and was legislatively mandated in the HITECH Act of 2009. It is charged with coordination of national efforts to implement and use the most advanced health information technology and electronic HIE. ONC is located within the Office of the Secretary for the U.S. Department of Health and Human Services.

Out-of Network (or Non-Participating)
A healthcare provider who is not in contract with an insurance carrier. Patients who use an out-of network provider are usually responsible for a greater portion of the charges incurred for the service.

Outpatient Service
A service you receive in one day at a hospital or clinic without staying overnight.

POS
Point-of-Service plan. A term used for a flexible type of HMO plan where patients have the choice to use services of a non-HMO network provider. If a patient refers to a non-HMO provider (self-referral), they pay a higher deductible.

PQRS
Physician Quality Reporting System (PQRS) Division B of the Tax Relief and Health Care Act of 2006 – Medicare Improvements and Extension Act of 2006 authorized a quality reporting incentive program known as the Physician Quality Reporting System(PQRS).

Practice Management Software
Software used in a healthcare provider’s office for appointment scheduling and billing purposes.

Pre-Certification
Sometimes insurer will ask for documentation to determine the medical necessity for the services proposed or given to the patient. It does not necessarily mean that benefits will be paid.

Pre-existing Condition (PEC)
A patient who is diagnosed with a medical condition before the start date of his insurance cover. The PEC may not be covered by an insurer for a determined amount of time as stated insurance contract.

Pre-existing Condition Exclusion
When a patient is denied insurance cover for a pre-existing condition that was prevalent before the health plan cover became effective.

Predetermination
Before the treatment begins, the insurer determines the maximum amount they will pay towards surgery, consultation, or other medical care.

Premium
A monthly charge paid by the insured or their employer to the insurance company.

Primary Care Physician
A physician, usually a general, family practitioner or internist, who delivers general health care, and is most often the first doctor a patient sees. This physician treats the patient directly, refers them to a specialist (or secondary care physician) or admits them to the hospital.

PTAN
Provider Transaction Access Number. This is used for Medicare reimbursements.

Referral
When the primary physician refers a patient to another doctor or a specialist.

Remittance Advice (R/A)
A document submitted by the insurance company with information on claims. This advice gives explanations for rejected or denied claims. Also referred to as Explanation of Benefits.

Responsible Party
A person, group or company responsible for paying a patient’s medical bill. Also referred to as the guarantor.

Revenue Code
A billing code used to name a specific room, service (X-ray, laboratory), or billing sum.

RVU
Relative Value Amount. An average amount that Medicare pays a provider for a treatment. This amount is determined by factors such as: the national uniform value of the service and the geographical location

Scrubbing
The insurance claim software used to check errors in an insurance claim before submitting it to the payer.

Secondary Insurance
Extra insurance that may pay some charges not paid by the patient’s primary insurance company. Whether payment is made depends on his/her insurance benefits, the coverage and the benefit coordination.

Security Standard
The HIPAA security standard is sort of a sub-set to the HIPAA privacy standard. It lays guidelines for developing and implementing policies to guard and reduce security breaches. HIPAA policy security laws apply more specifically to electronic PHI.

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

Self-Referral
When a patient sees a specialist without a referral made by the primary doctor.

SGR
The Sustainable Growth Rate. A component of the formula CMS uses to calculate physician payments for providing services to Medicare patients. It is based on the GDP and not on actual health care practice costs.

Skilled Nursing Facility
A nursing home meant for recovery. It provides specialized treatment to patients with long-term illnesses.

SOF
Signature on File.

Specialist
Physician who specializes in a particular area of medicine such as gynecology, cardiology, orthopedics, pediatrics, dermatology etc.

Statement
An invoice that gives details of the service received by the patient.

TAR
Treatment Authorization Request. An authorization number issued by insurance companies before the treatment is provided to the patient in order to receive payment.

Taxonomy Code
These are codes used to indicate a provider’s field of specialty, at times required to process a claim.

Term Date
Date the insurance contract is due to expire.

Tertiary Insurance Claim
This insurance covers any gaps in coverage that primary and secondary insurance does not cover.

Third Party Administrator (TPA)
A person or an independent entity who manages benefits, claims and administration for a self-insured company or group.

TIN
Tax Identification Number. Also referred to as Employer Identification Number (EIN).

TOP
Triple Option Plan. An insurance cover that offers the insured a choice of a traditional plan, an HMO, or a PPO. It is also commonly referred to as a cafeteria plan.

TOS
Type of Service. Description of the category of services performed.

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

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

Unbundling
Submitting multiple CPT codes when only one is required.

Untimely Submission
When the insurance payer allows a medical claim to be submitted within the time period but any 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. A 6-digit doctor identification number created by CMS. Now replaced by NPI number.

Usual Customary & Reasonable (UCR)
The insurer determines an allowable coverage limit to control the maximum amount they will pay for the service rendered.

Utilization Limit
Medicare sets limits on number of times a certain service can be provided annually to a patient. The claims can be rejected if the service surpasses this limit.

Utilization Review (UR)
Audit carried out to mitigate redundant inpatient or outpatient medical services.

Workers Comp
Insurance claim that is a result of a work related injury or illness.

Write-off
A difference between the physician fees and the insurance plan coverage for which the patient is not liable. In other words can be called ‘not covered’.