Medical Billing Glossary
70+ medical billing terms explained in plain language. If you're a physician or practice manager trying to make sense of EOBs, modifier codes, and payer jargon, this glossary has you covered.
A
Accounts Receivable (A/R)
The total money owed to a practice by patients and payers for services rendered. Tracked by age buckets (0-30, 31-60, 61-90, 90+ days). Healthy practices keep 85%+ under 60 days. Learn more →
Adjudication
The process by which an insurance payer reviews a submitted claim, determines coverage, and decides how much to pay.
Allowable Amount
The maximum dollar amount a payer will reimburse for a specific medical service, based on the provider's contract or the payer's fee schedule.
Appeal
A formal request to a payer to reconsider a denied or underpaid claim. Must include supporting documentation, clinical notes, and coding rationale.
Authorization (Prior Auth)
Pre-approval from a payer before a medical service is provided. Without it, claims are typically denied. Learn more →
B-C
Balance Billing
Billing a patient for the difference between the provider's charge and the payer's allowed amount. Restricted by the No Surprises Act for emergency services. Learn more →
Billing Compliance
Adherence to federal and state regulations governing how medical services are coded, billed, and documented. Non-compliance can result in audits, fines, or exclusion from payer programs.
Bundling
Combining multiple related procedures into a single CPT code for billing purposes. Payers bundle codes using CCI edits to prevent separate payment for services considered part of one procedure.
CAQH ProView
The universal credentialing database used by most commercial payers. Providers must maintain an active, attested profile for enrollment. Learn more →
CCI Edits
Correct Coding Initiative edits maintained by CMS that define which CPT code pairs cannot be billed together. Used by all payers to prevent improper code combinations.
Charge Capture
The process of recording all billable services performed during a patient encounter. Missed charges are the most common source of revenue leakage in medical practices.
Clean Claim
A claim that passes all payer edits on first submission without errors. Clean claims get paid faster and cost less to manage.
Clearinghouse
An intermediary that receives claims from providers, scrubs them for errors, and forwards them electronically to the appropriate payer.
CMS-1500
The standard claim form for professional (physician) services. Electronic equivalent is the 837P transaction. Learn more →
Co-insurance
The percentage of a medical bill that a patient pays after meeting their deductible. For example, 20% co-insurance means the patient pays 20% and the payer covers 80%.
Coordination of Benefits (COB)
The process of determining which payer is primary and which is secondary when a patient has coverage from multiple insurance plans.
Copay
A fixed dollar amount a patient pays at the time of service, as specified by their insurance plan. Copays do not count toward the deductible under most plans.
CPT Code
Five-digit code describing medical procedures and services. Required on every professional claim. Examples: 99213 (office visit), 93000 (ECG).
Credentialing
Verifying a provider's qualifications and enrolling them with insurance payers. Without active credentialing, providers can't bill insurance. Learn more →
D-E
Deductible
The amount a patient must pay out of pocket before insurance begins covering services. Learn more →
Denial
A claim that a payer refuses to pay. Common reasons: eligibility issues, missing authorization, coding errors. Each denial costs $25-$30 to rework.
DME
Durable Medical Equipment prescribed for home use — wheelchairs, CPAP machines, oxygen equipment. Billed with HCPCS Level II codes. Learn more →
Downcoding
When a payer reimburses at a lower CPT code level than what was submitted, reducing payment. Often caused by insufficient documentation or payer policy.
DRG
Diagnosis Related Group. Classification system for Medicare inpatient hospital payments based on diagnosis and procedures. Learn more →
E/M Code
Evaluation and Management codes (99202-99215) describing the level of care during a patient encounter. Based on medical decision making or total time.
EHR/EMR
Electronic Health Record / Electronic Medical Record. Digital systems for maintaining patient clinical data, used as the source for coding and billing documentation.
Eligibility Verification
Confirming a patient's insurance coverage, benefits, deductibles, and copays before the date of service. Learn more →
EOB
Explanation of Benefits. Document from a payer showing what was billed, allowed, paid, and what the patient owes.
ERA (Electronic Remittance Advice)
The electronic version of an EOB sent from a payer to a provider, used for automated payment posting and reconciliation.
F-I
Fee Schedule
List of accepted payment amounts for specific medical services, determined by payer contracts.
First Pass Rate
Percentage of claims accepted and paid on first submission. Industry average is 85-90%. Go Medical Billing clients see 96%+.
FWA (Fraud Waste and Abuse)
Federal enforcement framework targeting improper billing practices. Includes upcoding, unbundling, billing for services not rendered, and kickback schemes.
HCPCS
Healthcare Common Procedure Coding System. Level I is CPT codes, Level II covers supplies, DME, drugs, and non-CPT services.
Health Information Exchange (HIE)
Electronic sharing of patient health data between providers, payers, and public health agencies to improve care coordination and reduce duplicate testing.
HIPAA
Federal law setting standards for protecting patient health information. Mandatory for every entity handling PHI.
ICD-10-CM
International Classification of Diseases, 10th Revision. Diagnosis codes required on every medical claim. Updated annually each October.
In-Network
A provider who has a contract with a patient's insurance payer, agreeing to accept negotiated rates. Patients typically pay less for in-network services.
J-L
LCD (Local Coverage Determination)
Medicare Administrative Contractor policy that defines whether a service is covered and under what clinical conditions. Varies by geographic region.
Level of Service
The complexity tier assigned to an E/M visit (levels 1-5) based on medical decision making or time spent. Determines the CPT code and reimbursement amount.
M-P
MAC (Medicare Administrative Contractor)
Regional contractors that process Medicare claims, handle appeals, and set Local Coverage Determinations for their jurisdiction.
MCO (Managed Care Organization)
An insurance entity that manages healthcare delivery and costs through provider networks, utilization review, and negotiated rates. Includes HMOs, PPOs, and POS plans.
Medical Necessity
The standard payers use to determine if a service is clinically appropriate. Claims can be denied for lack of medical necessity even when correctly coded.
MIPS
Merit-based Incentive Payment System. Medicare quality program that adjusts physician payments based on performance in quality, cost, improvement activities, and promoting interoperability.
Modifier
Two-character code appended to a CPT/HCPCS code for additional information. Examples: 25 (separate E/M), 59 (distinct service), 26 (professional component).
NDC (National Drug Code)
Unique 10-digit identifier for every drug product in the US. Required on claims for physician-administered medications and some payer billing requirements.
No Surprises Act
Federal law effective January 2022 that protects patients from unexpected out-of-network bills for emergency services and certain non-emergency services at in-network facilities.
NPI
National Provider Identifier. Unique 10-digit number for every healthcare provider and organization. Required on every claim.
Out-of-Network
A provider who does not have a contract with a patient's insurance payer. Services are typically reimbursed at lower rates, and patients may face higher out-of-pocket costs. Learn more →
Payer
The insurance company or government program (Medicare, Medicaid) responsible for reimbursing providers for covered medical services.
Payment Posting
Recording insurance and patient payments, adjustments, and denials in the practice management system. Learn more →
PECOS
Provider Enrollment, Chain, and Ownership System. CMS online system for Medicare enrollment. Learn more →
Place of Service
Two-digit code on a claim indicating where the service was performed (e.g., 11 for office, 21 for hospital, 02 for telehealth). Affects reimbursement rates.
Prior Authorization
Approval required from a payer before performing certain medical services. Without prior auth, the claim will typically be denied. Learn more →
Provider Enrollment
The process of registering a healthcare provider with insurance payers so they can submit claims and receive reimbursement for covered services. Learn more →
Q-R
RCM (Revenue Cycle Management)
The entire financial process from scheduling through collection. Includes eligibility, coding, submission, posting, denial management, and patient billing.
Reimbursement
The payment a provider receives from a payer or patient for medical services rendered, based on contracted rates and coverage terms.
Remittance
A document or electronic transaction from a payer that details how a claim was processed, including amounts paid, adjusted, or denied.
Retroactive Authorization
Authorization obtained after a service has already been performed. Only granted under specific circumstances such as emergencies. Most payers have strict deadlines for retroactive auth requests. Learn more →
S-T
Secondary Insurance
A second insurance plan that may cover costs not paid by the primary insurer, such as co-insurance, copays, or deductibles.
Self-Pay
A patient who does not have insurance coverage and is responsible for the full cost of medical services. Practices often offer discounted self-pay rates. Learn more →
SOC (Standard of Care)
The accepted medical treatment guidelines for a specific condition. Deviating from SOC without documentation can trigger medical necessity denials.
Superbill
An itemized form listing all services, diagnoses, and charges from a patient encounter. Used to generate claims for insurance billing.
TCM (Transitional Care Management)
Medicare-reimbursable service for managing patients during the 30-day period after hospital discharge. Requires a phone call within 2 business days and a face-to-face visit within 7-14 days.
Third-Party Payer
Any entity other than the patient that pays for medical services, including commercial insurers, Medicare, Medicaid, and workers' compensation carriers.
Timely Filing
The deadline for submitting a claim to a payer (typically 90 days to 1 year). Missed deadlines result in permanent claim denial.
U-Z
UB-04
Standard claim form for institutional (hospital/facility) billing. Electronic equivalent is the 837I transaction.
UCR (Usual Customary and Reasonable)
A method payers use to determine the maximum allowable charge for a service based on what providers in the same area typically charge for the same service.
Underpayment
When a payer pays less than the contracted rate. Identified during payment posting by comparing paid vs. allowed amounts.
Upcoding
Billing for a higher-level service than what was performed or documented. A compliance violation that can trigger audits, fines, and exclusion from payer programs.
Workers' Compensation
Insurance coverage for employees injured on the job. Has its own billing rules, fee schedules, and authorization requirements separate from commercial insurance.
Write-Off
Charge removed from A/R because it can't be collected. Can be contractual (allowed amount difference) or bad debt (uncollectible patient balance).
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We handle every term in this glossary as part of our service. Call 888-701-6090 for a free billing assessment.