After a medical claim is submitted, the insurance company determines their financial responsibility for the payment to the provider.


A formal medical billing term that refers to insurance claims that haven’t been paid or balances owed by patients overdue by more than 30 days. Aging claims may become denied if they aren’t filed in time with a health insurance company.

Allowed Amount

The amount an insurance company will pay to reimburse a healthcare service or procedure. The patient will typically pay the balance if there is any remainder.

Ancillary Services

Any service administered in a hospital or other healthcare facility other than room and board, including biometrics tests, physical therapy, and physician consultations among other services. For example, imaging (such as x-rays and CAT scans) and laboratory testing (such as blood or urine testing) that are provided to a consumer in conjunction with hospital or physician care to assist with diagnosis and treatment.


American National Standard Institute (ANSI) is a private, not for profit organization that sets and approves standards for many industries. Healthcare ANSI Standards are approved by the ANSI organization and are published by the Washington Publishing Company. or


The process by which a patient or provider attempts to persuade an insurance payer to pay for more (or, in certain cases, pay for any) of a medical claim. The appeal on a claim only occurs after a claim has either been denied or rejected (See “Rejected Claim” and “Denied Claim”).

Assignment of Benefits (AOB)

A patient request for health benefit payments to be made directly to a designated person or facility, such as a physician or hospital. The assignment of benefits occurs after a claim has been successfully process.

Attending Provider

Refers to the medical staff member who is legally responsible for the care and treatment given to a patient.



Someoneone who enrolls with a managed care plan, and is entitled to receive coverage and payment for health care products and services covered by the contract with the plan.

Billing Provider

Also known as the Pay-to-Provider/Pay-to-Location is the entity or provider that the payer issues payment to.

Billing Service

A company contracted by a Healthcare Provider to perform day to day medical billing operations such as: Submitting and following up on medical claims on their behalf, to facilitate payment for service rendered.


Bundling occurs when a procedure or service with a unique CPT® or HCPCS code is included as part of a “more extensive” procedure or service provided at the same time. Meaning, it links specific services together under one procedure code.



A payment system in which health care providers (physicians, hospitals, pharmacists, etc.) receive a fixed payment per member per month (or year), regardless of how many or few services the patient uses.

Carve out

A product or service (such as prescription drug benefits or mental health care) that specializes in the particular service.

Centers for Medicare and Medicaid Services (CMS)

A federal agency that runs the Medicare and Medicaid programs.

Certification of Medical Necessity (CMN)

A Certificate of Medical Necessity (CMN) or a DME Information Form (DIF) is a form required to help document the medical necessity and other coverage criteria for selected durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) items.


A cost-sharing arrangement in which the managed care enrollee pays a specified flat amount for a specific service (such as $15.00 for an office visit or $10.00 for each prescription drug). It does not vary with the cost of the service, unlike coinsurance which is based on some percentage of charges.


An insurance policy provision under which both the insured person and the insurer share the covered charges in a specified ratio (e.g., 80% by the insurer and 20% by the enrollee).

Contractual Adjustment

This refers to a binding agree between a provider, patient, and insurance company wherein the provider agrees to charges that it will write off on behalf of the patient. Contractual adjustments may occur when there is a discrepancy between what a provider charges for healthcare services and what an insurance company has decided to pay for that service.

Coordination of Benefits (COB)

Coordination of benefits (COB) allows plans that provide health and/or prescription coverage for a person with Medicare to determine their respective payment responsibilities (i.e., determine which insurance plan has the primary payment responsibility and the extent to which the other plans will contribute when an individual is covered by more than one plan).



Amounts required to be paid by the insured under a health insurance contract before benefits become payable.

Discounted Fee-For-Service

An agreed-upon rate for service between the provider and payer that is usually less than the provider’s full fee. This may be a fixed amount per service or a percentage discount. Providers generally accept such contracts because they represent a means of increasing their volume or reducing their chances of losing volume.

Distribution Codes (DC)

Distribution Codes are found in (CA) Claims Acknowledgment Reports (Clearinghouse Reports) and represents the distribution of a claim. Possible values include but aren't limited to: A = ELECTRONIC TO PAYER C = PATIENT-DIRECT E = PAPER CLAIM-MAILBOX B = CARRIER-DIRECT F = PAPER CLAIM-HARDCOPY


Electronic Claim

A claim sent electronically to an insurance carrier from a provider’s billing software. The format of electronic claims must adhere to medical billing regulations set forth by the federal government.

Electronic Data Interchange (EDI)

This is the computer-to-computer exchange of business documents in a standard electronic format between business partners. Many Payers utilize an EDI also known as Intermediary to ensure Provider setup and proper billing prior to the claim making it to the adjudication level.

Electronic Funds Transfer

A method of transferring money electronically from a patient’s bank account to a provider or an insurance carrier.

Electronic Medical Records (EMR)

EMR is a digitized medical record for a patient managed by a provider onsite. EMRs may also be referred to as electronic health records (EHRs).

Electronic Remittance Advice

A digital version of the EOB, this document describes how much of a claim the insurance company will pay and, in the case of a denied claim, explains why the claim was returned.

Evaluation and Management (E/M)

E/M coding is the process by which physician-patient encounters are translated into five digit CPT codes to facilitate billing. The documentation for E/M services is based on three “key” components: 1. History 2. Physical Exam 3. Medical Decision-Making

Explanation of Benefits (EOB)

A document attached to a processed claim that explains to the provider and patient which services an insurance company will cover. EOBs may also explain what is wrong when a claim is denied.

Explanation of Medicare Benefits (EOMB)

A notice that is sent after the doctor files a claim for Part B services under the Original Medicare Plan. This notice explains what the provider billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay. This is being replaced by the Medicare Summary Notice (MSN), which sums up all the services (Part A and B) that were given over a certain period of time, generally monthly.



A location of which services are rendered outside of the Practice location. The most common facility locations in orthopedics are the emergency department, an inpatient setting, an operating room, or an Ambulatory Surgery Center (ASC).

Fee-for-Service (FFS) Reimbursement

Payment in specific amounts for specific services rendered. Payment may be made by an insurance company, the patient, or a government program such as Medicare or Medicaid. The form of payment is in contrast to payment retainer, salary, or other contract arrangements (to Physicians or other suppliers of service); and premium payment or membership fee for insurance coverage (by the patient).



A patient will be considered to be homebound if he/she has a condition due to an illness or injury that restricts his/her ability to leave the residence except with the aid of supportive devices (such as crutches, canes, wheelchairs and walkers); the use of special transportation; the assistance of another person; or if leaving home is medically contraindicated.



Inpatient care occurs when a person has a stay at a healthcare facility for more than 24 hours.


Meaningful Use

Meaningful Use is defined by the use of certified EHR technology in a meaningful manner (for example electronic prescribing); ensuring that the certified EHR technology is connected in a manner that provides for the electronic exchange of health information to improve the quality of care; and that in using certified EHR technology the provider must submit to the Secretary of Health & Human Services (HHS) information on quality of care and other measures.The Centers for Medicare & Medicaid Services (CMS) provide reimbursement incentives for physicians and hospital providers who are successful in becoming Meaningful Users of an EHR. Learn more here:


Non-covered Charges

Charges for services and supplies that are not covered under the health plan. Examples of non-covered charges may include things like acupuncture, weight loss surgery or marriage counseling. Consult with the patient's insurance plan for more information.

Non-network Provider/Out-of-network Provider

A healthcare provider who is not part of a plan’s network. Costs associated with out-of-network providers may be higher or not covered by your plan. Consult the payer for more information.


Ordering Provider

Refers to the provider ordering non-physician services for a patient (e.g., diagnostic laboratory test, pharmaceutical services, or durable medical equipment) when an insurance claim is submitted by a non-physician supplier of services. The ordering provider also may be rendering provider.

Out-of-Pocket Expense

The amount not reimbursed by insurance coverage and paid by the patient such as co-payments, deductibles and premiums.


This term refers to healthcare treatment that doesn’t require an overnight hospital stay, including a routine visit to a primary care doctor or a non-invasive surgery.


Pharmacy Benefit

t Coverage of prescription drugs by an insurance company. Often, beneficiaries will have an identification card designating their eligibility and will have to pay partially for the drug in the form of co-payments, deductibles, or coinsurance. Also referred to as a “Prescription Drug Benefit.” This benefit may be offered through a company other than your health insurer.


The amount paid to an insurer for providing coverage, typically paid on a periodic basis (monthly, quarterly, etc.).

Primary Care Physician

Refers to the provider who oversees the care of patients in a managed health care plan and refers to see a specialist for services as needed.

Protected Health Information (PHI)

PHI stands for Protected Health Information. The HIPAA Privacy Rule provides federal protections for personal health information held by covered entities and gives patients an array of rights with respect to that information. At the same time, the Privacy Rule is balanced so that it permits the disclosure of personal health information needed for patient care and other important purposes.


Referring Provider

Refers to the provider who sends the patient for test or treatment.


Reimbursement Refers to the actual payments received by providers or patients for benefits covered under an insurance plan.

Rendering Provider

The provider who rendered the care to the patient.


Supervising Provider

Refers to the provider who provided oversight of the rendering provider (e.g. supervision of a resident physician).


Taxpayer Identification Number/Tax Id Number (TIN)

An identifying number used for tax purposes in the United States. It is also known as a Tax Identification Number or Federal Taxpayer Identification Number. A TIN may be assigned by the Social Security Administration or by the Internal Revenue Service (IRS).

Third-Party Payment

(a) Payment by a financial agent such as an HMO, insurance company, or government rather than direct payment by the patient for medical-care services. (b) The payment for health care when the beneficiary is not making payment, in whole or in part, on his/her own behalf.


Usual, Customary, and Reasonable (UCR) Charges

Private health insurance offers the basis for reasonable-charge reimbursement of physicians. This approach was developed before the introduction of Medicare and was adopted by Medicare. “Usual” refers to the individual physician’s fee profile, equivalent to Medicare’s “Customary” charge screen. “Customary,” in this context, refers to a percentile of the pattern of charges made by physicians in a given locality. “Reasonable” is the lesser of the usual or customary screens.