Medical Billing Terminology
Medical Billing or RCM process is a very specific healthcare process and if you wanted to work in this field, you need to learn the RCM process Terminology which are using in day to day practice.
Medical Billing Terminology is mentioned as below,
Advance Beneficiary Notice (ABN): An ABN is a written notice from Medicare, given to a patient before receiving specific services, ABN notifying that Medicare may deny payment for that specific procedure or treatment. You will be personally responsible for full payment if Medicare denies payment.
Assignment of benefits (AOB): When an insurance company pays a provider directly for services
Allowed Amount: Allowed amount is the maximum amount paid by payer or insurance company on every claim.
Appeal : If a patient disagrees with a decision on claim about the health services of the insurance company, service or payment. You can file an appeal if the plan will not pay for, or does not allow or stops a service that the patient or provider believes should be covered or provided.
Approved Amount: The approved amount is agreement between the provider and plan to cover a particular service.
Assignment: When insurance pays share of the allowed charge directly to the physician or supplier.
Authorization: A patient’s request for permission to receive a service or treatment.
Adjudication: The process of deciding whether to accept, deny, or reject a claim.
Balance Bill: The difference between the allowed charge and the actual charge is known as Balance Bill.
Beneficiary: Insurance holders who are eligible to receive benefits through a health insurance program are known as beneficiaries.
Benefits: The services or amount provided and covered under an insurance program policy.
Capitation: It is a payment method for health care services in the USA. The physician, hospital, or other health care provider is paid based on the contracted rate for each member assigned, referred to as “Per Member Per Month (PMPM)” rate, regardless of the number or type of services provided.
Carrier: In US Healthcare, the insurance called as carrier or payer.
Cash Basis: The actual charge of the service when the service was performed to the patient.
Centers for Medicare and Medicaid Services (CMS): CMS is a federal or government agency that runs the Medicare and Medicaid program. CMS works to make sure that the people in these programs get high quality health care services at a reasonable cost. CMS is also responsible for HIPAA administrative simplification transactions and codes.
Claim: A claim is a request for payment for services and benefits received by patient or insurer.
CMS 1500 Form: The uniform professional claim form used to submit to insurance companies.
Coinsurance: The co-insurance is payment based on a percentage of the costs of the medical services received, usually around 10 to 20 percent. Coinsurance is usually found in indemnity, fee-for-service and PPO plans, often along with deductibles. It is part of out of pocket expenses.
Confidentiality: The ability to speak with the provider or representative without disclosing the information to an uninterested party.
Coordination of Benefits (COB): It is a process in which patients disclose the information of insurances he have and which one is primary and secondary for claim payment easily. COB information is also shared with insurance company also.
Copayment (co-pay): Co-pay is usually amount of $5 to $25, an HMO member pays the provider for services. This amount is not based on a percentage of the actual cost of services, but is predetermined. It ia also part of out of pocket expense.
Covered Services: A health service or item that is included in the plan and that is paid for partially or fully by insurance.
Covered Entity: As per HIPAA, a health plan, a health care clearinghouse, or a health care provider who transmits any health information in electronic form in connection with a HIPAA transaction.
Deductible: The amount that a member must pay for medical services before health plan coverage begins. It is on yearly basis. Ex- Medicare Part B deductible for 2025 is $257 .
Demographic Data: Data that describe the characteristics of the patient or guarantor. Demographic data include but are not limited to age, sex, race/ethnicity, and primary language.
Department of Health and Human Services (DHHS): DHHS administers “social” programs at the Federal level dealing with the health and welfare of the citizens of the United States.
Determination: A decision made to either pay in full, pay in part, or deny a claim.
Diagnosis Code: DX codes a standardized system used to code diseases and medical conditions data. Currently ICD-10 codes are using the latest updates.
Disclosure: Release or divulgence of information by an entity to persons or organizations outside of that entity.
Dis-enroll: Ending health care coverage with a health plan.
Durable medical equipment (DME): Equipment like walkers, wheelchairs, and hospital beds.
Effective Date: The date on which health plan coverage starts or begins.
Explanation of Benefits (EOB): EOB is a statement that is sent to the patient and or provider when a claim is filed. The EOB shows what the provider billed for, the plan’s approved amount, paid and denied amount.
Evaluation and management (E/M) codes: Codes used to assess a patient.
Electronic claim: A claim sent electronically to the payer.
Electronic remittance advice (ERA): A form sent from a health plan to a healthcare provider about a claim.
Fee Schedule: A list of services and their charges known as fee schedule.
Fee-for-Services: A method of paying the provider for services based on the fee schedule.
Guarantor: The person responsible for payment of rendered services. This person is not necessarily the same as the subscriber.
Health Care Provider: A person who is trained and licensed to give health care services or treatment..
Health Insurance Portability and Accountability Act (HIPAA): HIPAA is the Health Insurance Portability and Accountability Act created in 1996.
Health Maintenance Organization (HMO): A legal corporation that provides health care in return for pre-set monthly payments. For most HMOs, members must use the physicians, hospitals and other health care professionals in the HMO’s network in order to be covered for their care. There are several models of HMO, including the Staff Model, Group Model, IPA Model, Direct Contract Model and Mixed Model.
Indemnity: This is a form of coverage offered by most traditional insurers.
Managed Care: An HMO, PPOs and some forms of indemnity insurance coverage that incorporate preadmission certification and other utilization controls.
Managed Care Organization (MCO): A health plan that provides coordinated health care through a network of primary care physicians and hospitals for pre-set monthly payments.
Medicaid: A joint federal and state program to cover medical costs for qualifying low income individuals. Medicaid programs vary from state to state.
Medicaid MCO: A Medicaid MCO provides comprehensive services to Medicaid beneficiaries. Maryland has seven (7) MCO’s, Amerigroup, Maryland Physicians Care, Priority Partners, Riverside Health, United Health Care Community Plan, MedStar, and Jai.
Medically Necessary: Services or treatments are proper and needed for the diagnosis for treatment of your medical condition.
Medigap Policy: A Medicare supplement insurance policy sold by private insurance companies to fill “gaps” in Original Medicare Plan coverage.
Member: An eligible employee who, through his or her place of employment, has enrolled in a health plan.
Network: A group of health care providers and suppliers of other goods and services to provide service to patients called network.
Non-covered Service: The service
(a) does not meet the requirements of a benefit and
(b) may not be considered reasonable and necessary.
Non-participating Physician: A provider that is not contracted or accepts assignment with a particular plan is known as non par physician.
Nurse Practitioner: A nurse who has advanced training and assists physicians by providing care to patients in their absence.
Out of Network: Services received from a health care provider who does not belong to the member’s health plan’s network of selected and approved physicians and hospitals list is know as out of network provider or hospital.
Out of Pocket Costs: Health care expenses that the patient is responsible which not fully or partially covered by their plan.
Participating Physician or Supplier: A provider who agrees to accept assignment on the claims. These providers should only initially bill for the patient’s cost share amount.
Payer: Insurance company.
PCP – Primary Care Physician (PCP): A physician, who usually specializes in family practice, general practice, internal medicine or pediatrics.
PMS (Practice Management System): The software or system the provider uses for billing.
Point of Service (POS): A health plan option that allows members to use either a network provider or a non-network provider at their discretion.
Place of Service (POS): The place where service rendered is denied as POS in medical billing. Ex- office, home, birthing place, etc
Preferred physicians and/or health care practitioners (providers): The term used to describe the physicians, health care practitioners and facilities included in an insurance plan network.
Preferred Provider Organization (PPO): A network of doctors and hospitals that provide health care services at a pre-negotiated lower price.
Premium: The predetermined monthly membership fee a subscriber or employer pays for health plan coverage.
Preventive Care: Care designated to keep the patient healthy or to prevent illness, such as colorectal cancer screening, yearly mammograms, and flu shots.
Primary Care: A basic level of care usually given by doctors who work with general and family medicine.
Primary Payer: An insurance policy, plan, or program that pays first on a claim for medical care.
Protected Health Information (PHI): Individually health information transmitted or maintained in any form or medium, which is held by a covered entity or its business associate. Relates to a past, present, or future physical or mental condition, provision of health care or payment for health care.
Referral: The formal process that gives a health plan member authorization to receive care from a provider other than his or her primary care provider.
Secondary Payer: An insurance policy that supplements the primary coverage and pays second on a claim for medical care.
Self-Insurance: Practice of an individual, group of individuals, employer or organization that assumes complete responsibility for losses, which might be insured against, such as health care expenses.
Self-Pay: A term to mean that the patient owes the medical bill. Statement: A bill that is sent to the patient for services/items provided.
Subscriber: An eligible employee or eligible retiree who, through his or her place of employment, has enrolled in a health plan.
Statement: A bill that is sent to the patient for services/items provided.
Subscriber: An eligible employee or eligible retiree who, through his or her place of employment, has enrolled in a health plan.
Super-Bill (also referred to as; charge document, fee slip; routing slip; encounter form): An internal document created and used to capture medical charges. The superbill typically contains the most frequently used CPT and ICD codes, patient demographic and insurance information.
Termination Date: The date that an agreement expires; or, the date that a subscriber and/or member ceases to be eligible.
Third Party Administrator (TPA): An organization that administers health care benefits-including claims review, claims processing, etc.- usually for self-insured employers.
Timely Filing: Period of time that the provider has to file a claim. This may vary by insurance carrier. Typically the filing period is 6 to 12 months.
Transaction: The exchange of information between two parties to carry out financial or administrative activity.