Medical billing has its own language. Do you know all the key terms?
From CPT codes to claim denials, every word impacts payments and reimbursements.
Missing key terms can lead to errors and delays.
This guide makes medical billing terms simple and easy to understand.
Ready to decode the lingo and avoid costly mistakes? Let’s get started!
Common Medical Billing Terms You Should Know
-Clearinghouse
A third-party service that reviews and submits claims to insurance payers. It checks claims for errors before sending them for payment. This process is called "scrubbing."
-Explanation of Benefits (EOB)
A document from the insurance company that explains how a claim was processed. It shows what was covered, denied, or needs to be paid by the patient.
-CPT Codes
Acronym for Current Procedural Terminology, these codes represent medical procedures performed by providers.
-ICD-10 Codes
International Classification of Diseases codes describe the reason for a medical service. Insurers use these codes to determine the amount of payment.
-Billed and Allowed Amounts
The billed amount is what a provider charges for a service. The allowed amount is what the insurance agrees to pay.
-Deductible
The amount of money a patient must pay before their insurance begins to pay for medical expenses.
-Copay
A fixed fee a patient pays for a healthcare service, like doctor visits or lab tests.
-Coinsurance
It is the percentage of medical costs that a patient pays after meeting their deductible.
-Ineligible Services
Services not covered by insurance due to policy exclusions or out-of-network providers.
-Bundling
Grouping multiple services under a single billing code. Some bundled services may not be reimbursed separately.
-Experimental or Investigational Services
Treatments insurance won’t cover because they are not widely accepted or FDA-approved.
-Coordination of Benefits (COB)
The process determined which insurance pays first when a patient has multiple health plans.
-Appeal
It is the request for insurance to review and reconsider a denied claim.
-Assignment of Benefits (AOB)
An agreement that allows insurers to pay providers directly for services.
-Accounts Receivable (AR)
The money owed to a provider for delivered medical services.
-Adjudication
The process an insurer uses to review and determine claim payment.
-Advance Beneficiary Notice (ABN)
A notice informing patients that a service may not be covered by insurance and they may have to pay.
-Aging Bucket (AR Aging)
A report showing unpaid claims and overdue patient balances.
-Claim Scrubbing
Checking a claim for errors before submitting it to insurance.
-Denied Claim
A claim that has been reviewed but not paid by insurance.
-Electronic Remittance Advice (ERA)
A digital document from an insurance payer explaining payment details.
-Eligibility and Verification
Confirming patient insurance coverage before services are provided.
-Fee Schedule
A list of the maximum payment amounts an insurance company will cover for services.
-Guarantor
The person responsible for paying a medical bill.
-Medically Necessary
Services or treatments required for a patient’s health, as defined by insurance rules.
-Modifier
A code added to CPT codes to give more details about a procedure.
-National Provider Identifier (NPI)
A unique 10-digit number assigned to healthcare providers for billing purposes.
-Place of Service (POS) Codes
Codes that indicate where a service was performed, such as a hospital or clinic.
-Authorization
When an insurance company gives the approval for a procedure before it happens.
-Balance Billing
When a provider bills the patient for the remaining balance after insurance pays.
-Capitation
A fixed amount is paid to the doctor per patient, no matter how many times they visit.
-Charge Capture
The process of recording all services a patient receives so they can be billed.
-Claim Adjustment Reason Codes (CARC)
Codes that explain why an insurance company paid a different amount than expected.
-Claim Status Codes (CSC)
Codes that tell you if a claim is still being processed, approved, or denied.
-Downcoding
When an insurance company lowers the level of a billed service, reducing the payment.
-DRG (Diagnosis-Related Group)
A system used in hospitals to classify patient stays and determine payments.
-HCPCS (Healthcare Common Procedure Coding System)
A set of codes used for billing Medicare and Medicaid.
-Medicare Summary Notice (MSN)
A report that is sent to Medicare patients about services received.
-Patient Responsibility
The amount a patient must pay out of pocket after insurance.
-Payer ID
A unique number is used to identify an insurance company in billing.
-Superbill
A form providers use to list all services and charges before submitting a claim.
-Upcoding
When a provider bills for a more expensive service than what was actually provided.
-Write-Off
The amount a provider agrees not to charge a patient, usually because of insurance agreements.
-Premium
The monthly fee paid for health insurance coverage.
-Provider
A healthcare professional or facility that offers medical services.
-Rejection
A claim not processed by insurance due to errors or missing information.
-Remittance Advice
A statement from insurance detailing payments made to a provider.
-Secondary Insurance
A second insurance policy that helps cover costs not paid by primary insurance.
-Self-Pay
When a patient pays for medical services out-of-pocket instead of using insurance.
-Third-Party Administrator (TPA)
A company that handles medical claims on behalf of an employer or insurance provider.
-Verification of Benefits (VOB)
Checking insurance coverage details before providing medical services.
Conclusion:
Medical billing terminology is key to getting paid correctly in healthcare. It helps doctors and staff send claims without mistakes and understand insurance details.
Knowing these terms also helps patients see what they are being charged for. A clear billing process makes payments easier for everyone.
FAQs
What is medical billing terminology?
Medical billing terminology includes the words and codes that are used in healthcare billing. These terms help providers, insurance companies, and patients understand charges, claims, and payments.
Why is it important to know medical billing terms?
Understanding medical billing terms prevents claim rejection, enables one to understand insurance information, and speeds up payments. It also informs patients what they're being billed for.
What is the difference between a rejected and a denied claim?
A rejected claim, according to policy guidelines, was processed but not paid, while a rejected claim has errors and was not processed.
What is the difference between a claim and a bill?
A claim is a request sent to the insurance for payment. A bill is what the patient receives after insurance has processed the claim.
