Introduction
Medical billing is a complex and essential process within the healthcare industry. Professionals in this field must be well-versed in a variety of terms and abbreviations to ensure accurate claims processing and reimbursements. Understanding medical billing terminology is crucial for healthcare providers, medical billers, coders, and insurance specialists. This glossary provides a comprehensive guide to commonly used medical billing terms, helping professionals navigate the intricacies of medical billing with confidence.
Key Medical Billing Terms
1. Allowed Amount
The maximum amount an insurance company will pay for a covered healthcare service. The patient may be responsible for any remaining balance.
2. Assignment of Benefits (AOB)
An agreement that allows healthcare providers to receive payments directly from the insurance company rather than the patient.
3. Beneficiary
A person who is eligible to receive benefits under a health insurance policy, such as a patient covered by Medicare or Medicaid.
4. Capitation
A payment model in which healthcare providers receive a fixed amount per patient enrolled in a health plan, regardless of the number of services provided.
5. Claim
A request for payment submitted by a healthcare provider to an insurance company for services rendered to a patient.
6. Claim Adjustment
Modifications made to a submitted claim, which may result in payment changes due to errors, policy limitations, or contractual agreements.
7. Clearinghouse
An intermediary between healthcare providers and insurance payers that processes and transmits electronic claims to ensure they meet formatting and compliance requirements.
8. Co-Insurance
The percentage of medical costs a patient is required to pay after meeting their deductible. For example, if the co-insurance is 20%, the insurance covers 80% of the allowed amount.
9. Co-Payment (Co-Pay)
A fixed amount a patient pays for a covered healthcare service at the time of the visit, as defined by their insurance plan.
10. Current Procedural Terminology (CPT) Codes
A standardized set of codes maintained by the American Medical Association (AMA) to describe medical, surgical, and diagnostic procedures.
11. Deductible
The amount a patient must pay out-of-pocket before their insurance plan starts covering healthcare expenses.
12. Denial Code
A code assigned by insurance companies indicating the reason a claim was denied.
13. Diagnosis-Related Group (DRG)
A classification system used by Medicare and other insurers to determine reimbursement rates for hospital inpatient services.
14. Electronic Health Record (EHR)
A digital version of a patient’s medical history, treatment plans, and other healthcare-related information.
15. Electronic Remittance Advice (ERA)
A digital notification sent by an insurance company that provides details on claims processed, including payments and adjustments.
16. Explanation of Benefits (EOB)
A statement sent by an insurance company to a patient or provider explaining how a medical claim was processed and what portion of the bill is covered.
17. Fee Schedule
A list of set fees for medical services, as determined by a healthcare provider or insurance company.
18. Fraud and Abuse
Fraud refers to intentional deception in medical billing for financial gain, while abuse involves billing for unnecessary services or failing to follow proper coding procedures.
19. Global Period
A timeframe defined by Medicare during which all necessary follow-up care related to a surgical procedure is included in the original payment.
20. Health Insurance Portability and Accountability Act (HIPAA)
A federal law that protects patient privacy and ensures the secure handling of health information.
21. Healthcare Common Procedure Coding System (HCPCS)
A coding system used to describe medical services, supplies, and equipment for billing purposes.
22. Medicaid
A government-funded health insurance program for low-income individuals and families.
23. Medicare
A federal health insurance program for individuals aged 65 and older, as well as certain younger individuals with disabilities.
24. Modifier
A two-digit code added to a CPT or HCPCS code to provide additional details about a procedure or service.
25. National Provider Identifier (NPI)
A unique 10-digit identification number assigned to healthcare providers for billing and administrative purposes.
26. Out-of-Pocket Costs
Expenses a patient must pay directly, including deductibles, co-insurance, and co-payments.
27. Patient Responsibility
The portion of a medical bill that a patient is responsible for paying after insurance coverage.
28. Place of Service (POS) Code
A code used on claims to indicate where a medical service was provided (e.g., hospital, clinic, home care).
29. Pre-Authorization (Prior Authorization)
Approval required from an insurance company before a specific medical service, treatment, or prescription is provided.
30. Primary Insurance
The main insurance policy that provides coverage for a patient’s healthcare expenses.
31. Provider
A healthcare professional or facility that offers medical services, such as doctors, hospitals, and clinics.
32. Referral
A recommendation from a primary care physician for a patient to see a specialist or receive specific medical services.
33. Relative Value Unit (RVU)
A measure used by Medicare and other insurers to determine reimbursement rates based on the value of medical services.
34. Revenue Cycle Management (RCM)
The financial process that healthcare facilities use to track patient care from registration to final payment.
35. Secondary Insurance
Additional insurance coverage that helps pay for medical expenses not covered by a patient’s primary insurance.
36. Superbill
A document provided by healthcare providers that outlines services rendered, including CPT and diagnosis codes, for insurance reimbursement purposes.
37. Third-Party Payer
An entity, such as an insurance company, that pays medical claims on behalf of the insured individual.
38. Timely Filing Limit
The deadline by which a healthcare provider must submit a claim to an insurance company for reimbursement.
39. UB-04 Form
A standardized billing form used by hospitals and institutional providers to submit claims for reimbursement.
40. Write-Off
The portion of a medical bill that a healthcare provider agrees to forgo, typically due to contractual agreements with insurance companies.
Conclusion
Mastering medical billing terminology is essential for professionals in the healthcare industry. A strong grasp of these terms ensures accurate billing, reduces claim denials, and improves communication between providers, insurers, and patients. Whether you are a medical biller, coder, or healthcare administrator, understanding these terms will enhance your efficiency and expertise in the field. Staying informed and up-to-date with industry changes is key to success in medical billing and healthcare administration.
