Medical Billing Glossary
Your comprehensive guide to medical billing terminology, codes, and acronyms
Over 80+ essential terms every healthcare professional should know
A
Accounts Receivable (AR)
Money owed to a healthcare provider for services rendered but not yet paid. AR is tracked in days, with lower AR days indicating faster payment collection.
Adjustment
A change to a patient's account that increases or decreases the balance. Common adjustments include contractual write-offs, bad debt, and professional courtesy discounts.
Allowed Amount
The maximum amount an insurance plan will pay for a covered service. Also called eligible expense, payment allowance, or negotiated rate.
Authorization (Prior Authorization)
Approval from an insurance company required before certain services, procedures, or medications can be provided. Also called pre-authorization or pre-certification.
B
Balance Billing
Billing a patient for the difference between the provider's charge and the insurance allowed amount. This practice is prohibited in many situations.
Batch Processing
Submitting multiple insurance claims together as a group rather than individually. This improves efficiency in claim submission.
Beneficiary
A person who receives health insurance benefits. Also called member, enrollee, or covered person.
Business Associate Agreement (BAA)
A HIPAA-required contract between a covered entity and a business associate that handles Protected Health Information (PHI).
C
Claim
A request for payment submitted to an insurance company by a healthcare provider for services rendered to a patient.
Clearinghouse
An intermediary that receives claims from healthcare providers, scrubs them for errors, formats them properly, and forwards them to insurance payers.
CMS-1500
The standard claim form used by healthcare professionals to bill Medicare, Medicaid, and most insurance companies for outpatient services.
Coinsurance
The percentage of costs a patient pays for covered services after meeting their deductible. For example, 20% coinsurance means the patient pays 20% and insurance pays 80%.
Copayment (Copay)
A fixed amount a patient pays for covered healthcare services, usually at the time of service. For example, $30 for an office visit.
CPT (Current Procedural Terminology)
A standardized set of codes maintained by the AMA used to describe medical, surgical, and diagnostic services for billing purposes.
Credentialing
The process of verifying a healthcare provider's qualifications and enrolling them with insurance networks to receive reimbursement.
D
Days in AR
Average number of days it takes to collect payment after services are rendered. Industry standard is 30-40 days; lower is better.
Deductible
The amount a patient must pay out-of-pocket for covered services before insurance begins to pay. Deductibles typically reset annually.
Denial
A claim rejected by an insurance company for payment. Denials can often be appealed if additional information or corrections are provided.
Denial Management
The process of preventing, identifying, analyzing, and resolving claim denials to maximize revenue recovery.
DOS (Date of Service)
The date when medical services were provided to a patient. Critical for accurate claim submission and timely filing requirements.
E
EDI (Electronic Data Interchange)
The electronic exchange of healthcare information between providers, payers, and clearinghouses in a standardized format.
Eligibility Verification
The process of confirming a patient's insurance coverage and benefits before providing services to ensure payment.
EOB (Explanation of Benefits)
A statement from an insurance company explaining what was paid, denied, or adjusted on a claim. Not a bill.
ERA (Electronic Remittance Advice)
An electronic version of an EOB sent from insurance companies to providers, detailing claim payments and adjustments.
F
First-Pass Resolution Rate
The percentage of claims paid on first submission without requiring resubmission or appeals. Higher rates indicate cleaner claims.
Fee Schedule
A complete listing of fees used by a healthcare provider for services rendered or by an insurer for allowed amounts.
G
Guarantor
The person responsible for paying a patient's medical bills. Often the patient themselves, or a parent/guardian for minors.
H
HCPCS (Healthcare Common Procedure Coding System)
A standardized coding system used to identify products, supplies, and services not included in CPT codes, such as ambulance services and durable medical equipment.
HIPAA (Health Insurance Portability and Accountability Act)
Federal law establishing standards for protecting patient health information privacy and security.
HITECH Act
Health Information Technology for Economic and Clinical Health Act, which strengthened HIPAA privacy and security provisions.
I
ICD-10 (International Classification of Diseases, 10th Revision)
A standardized diagnostic coding system used to classify and code diagnoses, symptoms, and procedures for billing and medical records.
In-Network Provider
A healthcare provider who has contracted with an insurance plan to provide services at negotiated rates. Lower patient costs.
Insurance Verification
The process of confirming a patient's active insurance coverage, benefits, and eligibility before providing services.
L
LCD (Local Coverage Determination)
Medicare policies that outline coverage criteria for specific services or items in a particular geographic area.
M
Medical Necessity
Healthcare services or supplies needed to diagnose or treat an illness or injury that meet accepted standards of medical practice.
Medicaid
A joint federal and state program that provides health coverage to eligible low-income individuals and families.
Medicare
Federal health insurance program primarily for people 65 and older, and certain younger people with disabilities.
Modifier
A two-digit code added to a CPT or HCPCS code to provide additional information about a service or procedure performed.
N
NCD (National Coverage Determination)
Medicare policies that establish nationwide coverage criteria for specific services or items.
Net Collection Rate
The percentage of expected payments actually collected, calculated as (payments collected / total charges - contractual adjustments) × 100.
NPI (National Provider Identifier)
A unique 10-digit identification number required for all healthcare providers when submitting electronic claims.
O
Out-of-Network Provider
A healthcare provider who has not contracted with an insurance plan. Typically results in higher patient costs and may not be covered.
Out-of-Pocket Maximum
The most a patient will pay for covered services in a plan year. After reaching this limit, insurance pays 100% of covered services.
P
Patient Responsibility
The amount a patient owes for healthcare services after insurance has processed the claim, including deductibles, copays, and coinsurance.
Payer
An entity that pays for healthcare services, typically an insurance company, government program, or patient.
PHI (Protected Health Information)
Any individually identifiable health information protected under HIPAA, including demographic, medical, and financial information.
Place of Service (POS)
A two-digit code indicating the location where services were provided (e.g., 11 for office, 21 for inpatient hospital, 23 for emergency room).
Premium
The amount paid (usually monthly) to an insurance company to maintain health coverage, regardless of whether services are used.
Prior Authorization
Approval from an insurance company required before certain services can be provided to ensure coverage and payment.
R
RCM (Revenue Cycle Management)
The financial process healthcare facilities use to track patient care from registration through final payment, including all administrative and clinical functions.
Rejection
A claim returned by a payer before processing due to errors or missing information. Can be corrected and resubmitted.
Remittance Advice
A document from an insurance company explaining payment, denial, or adjustment decisions on claims. Can be paper (EOB) or electronic (ERA).
Resubmission
Sending a previously rejected or denied claim back to the insurance company after making corrections or adding required information.
S
Scrubbing
The automated process of checking claims for errors, missing information, and coding issues before submission to reduce rejections and denials.
Self-Pay
Patients who pay for healthcare services out-of-pocket without insurance coverage. Also called cash-pay patients.
Superbill
A detailed invoice outlining services provided during a patient visit, including diagnoses (ICD-10), procedures (CPT), and charges.
T
Timely Filing Limit
The deadline by which a claim must be submitted to an insurance company after services are rendered. Varies by payer, typically 30-365 days.
U
UB-04
The standard claim form used by hospitals and institutional providers to bill insurance companies for inpatient and outpatient services.
Upcoding
The illegal practice of billing for a more complex or expensive service than was actually provided. Considered healthcare fraud.
W
Write-Off
An amount removed from a patient's account that will not be collected. Includes contractual adjustments, bad debt, and charity care.
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