Resources
Medical Billing Glossary
41 medical billing and revenue cycle terms, explained in plain English — no jargon required.
A
- Adjudication
- The process an insurance payer uses to review a claim and decide how much of it to pay, deny, or apply to patient responsibility.
- Allowed Amount
- The maximum amount a payer will pay for a covered service under its contract with a provider. Anything billed above it is written off or, in some cases, billed to the patient.
- Appeal
- A formal request asking a payer to reconsider a denied or underpaid claim, usually with supporting documentation attached.
- AR Days (Days in Accounts Receivable)
- The average number of days it takes a practice to collect payment after a service is provided. Lower is better; well-run billing keeps AR days under 30.
- Assignment of Benefits (AOB)
- A patient’s authorization for the insurance company to pay the provider directly instead of sending payment to the patient.
- Authorization (Prior Authorization)
- Advance approval from a payer that a specific service is medically necessary and will be covered. Missing authorizations are a common cause of denials.
B
- Balance Billing
- Billing a patient for the difference between the provider’s charge and the payer’s allowed amount. Restricted in many situations, including by the No Surprises Act.
- Bundling
- When a payer combines two or more billed procedures into a single payment because it considers them part of the same service.
C
- CAQH
- A nonprofit organization whose online profile system payers use to collect and verify provider information during credentialing.
- Charge Capture
- The process of recording every billable service a provider performs so it can be coded and billed. Missed charges are lost revenue.
- Claim
- The formal request for payment a provider submits to an insurance payer, listing the patient, diagnoses, and services performed.
- Claim Scrubbing
- Automated and manual checks that catch errors in a claim (missing data, invalid codes, payer-specific rules) before it is submitted, raising the first-pass acceptance rate.
- Clean Claim
- A claim that is accepted and paid by the payer on first submission, with no errors, rejections, or requests for more information.
- Clearinghouse
- A third-party service that receives electronic claims from providers, checks them for formatting errors, and routes them to the correct payers.
- CMS
- The Centers for Medicare & Medicaid Services — the federal agency that runs Medicare and Medicaid and sets many of the rules the rest of the industry follows.
- Coordination of Benefits (COB)
- The rules that decide which insurance pays first when a patient has more than one plan.
- Copay, Coinsurance & Deductible
- The three main forms of patient responsibility: a fixed per-visit fee (copay), a percentage of the allowed amount (coinsurance), and the annual amount a patient pays before insurance starts covering (deductible).
- CPT Code
- Current Procedural Terminology — the five-digit codes that describe the procedures and services a provider performed. Updated annually by the AMA.
- Credentialing
- The process of verifying a provider’s qualifications and enrolling them with insurance networks so their claims can be paid in-network.
D
- Denial
- A payer’s refusal to pay a claim (or a line on it), always with a reason code. Many denials are correctable and recoverable through rework and appeals.
E
- EDI (Electronic Data Interchange)
- The standardized electronic formats (like the 837 claim and 835 remittance) that providers, clearinghouses, and payers use to exchange billing data.
- Eligibility Verification
- Checking a patient’s insurance coverage, benefits, and patient responsibility before the visit, so claims don’t fail after the fact.
- EOB (Explanation of Benefits)
- The statement a payer sends to a patient explaining what was billed, what was paid, and what the patient owes. The provider-facing equivalent is the remittance advice.
- ERA (Electronic Remittance Advice)
- The electronic version of a payer’s payment explanation (the X12 835 file), used to post payments and adjustments automatically.
F
- Fee Schedule
- The list of prices a payer (or practice) assigns to each billable code. Contracted fee schedules determine the allowed amounts on claims.
H
- HCPCS
- Healthcare Common Procedure Coding System — codes used alongside CPT, mainly for supplies, equipment, drugs, and services Medicare covers.
- HIPAA
- The federal law that sets privacy and security standards for protected health information and governs how billing companies and providers handle patient data.
I
- ICD-10
- The diagnosis coding system used on claims to explain why a service was performed. Diagnosis codes must support the medical necessity of the procedures billed.
M
- Medical Necessity
- The payer’s standard that a service must be reasonable and required for diagnosis or treatment. Claims lacking documented necessity get denied.
- Modifier
- A two-character addition to a CPT/HCPCS code that gives the payer extra context — for example, that a procedure was performed on both sides or was distinct from another service the same day.
N
- NPI (National Provider Identifier)
- The unique 10-digit number that identifies each healthcare provider and organization on claims and in payer systems.
P
- Payer
- Any organization that pays for healthcare services — commercial insurance companies, Medicare, Medicaid, and workers’ comp or auto (PIP) carriers.
- Payment Posting
- Recording payer and patient payments (and the related adjustments) against the correct claims and charges, so the practice’s books match reality.
- PIP (Personal Injury Protection)
- Auto-insurance medical coverage that pays for injury treatment after a crash regardless of fault. PIP billing follows different rules and timelines than health insurance.
- Prior Authorization
- See Authorization — payer approval obtained before a service is performed.
R
- Rejection
- A claim sent back before adjudication (usually by the clearinghouse or payer front-end) because of formatting or data errors. Unlike a denial, it was never processed.
- Remittance Advice
- The payer’s explanation of how a batch of claims was paid, sent to the provider on paper or electronically (see ERA).
- Revenue Cycle Management (RCM)
- The end-to-end management of everything between scheduling a patient and collecting the final dollar: eligibility, coding, claims, posting, denials, and patient billing.
S
- Superbill
- The encounter summary listing the diagnoses and services from a visit, used as the source document for coding and billing.
T
- Timely Filing Limit
- The payer’s deadline for submitting a claim after the date of service. Claims filed late are denied and usually unrecoverable — a key reason aged AR must be worked quickly.
W
- Write-Off
- The portion of a charge a practice removes from its books, either by contract (the difference between billed and allowed amounts) or by choice (e.g., uncollectible balances).
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