Medical Billing Terms and Medical Coding Terminology

Those in medical billing and coding careers have a terminology of unique terms and abbreviations. Below are some of the more frequently used Medical Billing terms and acronyms. Also included is some medical coding terminology.

Aging - Refers to the unpaid insurance claims or patient balances that are due past 30 days. Most medical billing software's have the ability to generate a separate report for insurance aging and patient aging. These reports typically list balances by 30, 60, 90, and 120 day increments.

Health Care

Appeal - When an insurance plan does not pay for treatment, an appeal (either by the provider or patient) is the process of formally objecting this judgment. The insurer may require additional documentation.

Applied to Deductible - Typically seen on the patient statement. This is the amount of the charges, determined by the patients insurance plan, the patient owes the provider. Many plans have a maximum annual deductible that once met is then covered by the insurance provider.

Assignment of Benefits - Insurance payments that are paid to the doctor or hospital for a patients treatment.

Beneficiary  - Person or persons covered by the health insurance plan.

Clearinghouse - This is a service that transmits claims to insurance carriers. Prior to submitting claims the clearinghouse scrubs claims and checks for errors. This minimizes the amount of rejected claims as most errors can be easily corrected. Clearinghouses electronically transmit claim information that is compliant with the strict HIPPA standards (this is one of the medical billing terms we see a lot more of lately).

CMS - Centers for Medicaid and Medicare Services. Federal agency which administers Medicare, Medicaid, HIPPA, and other health programs. Formerly known as the HCFA (Health Care Financing Administration). You'll notice that CMS it the source of a lot of medical billing terms.

CMS 1500 - Medical claim form established by CMS to submit paper claims to Medicare and Medicaid. Most commercial insurance carriers also require paper claims be submitted on CMS-1500's. The form is distinguished by it's red ink.

Coding -Medical Billing Coding involves taking the doctors notes from a patient visit and translating them into the proper ICD-9 code for diagnosis and CPT codes for treatment.

Co-Insurance - Percentage or amount defined in the insurance plan for which the patient is responsible. Most plans have a ratio of 90/10 or 80/20, 70/30, etc. For example the insurance carrier pays 80% and the patient pays 20%.

Co-Pay - Amount paid by patient at each visit as defined by the insured plan.

CPT Code - Current Procedural Terminology. This is a 5 digit code assigned for reporting a procedure performed by the physician. The CPT has a corresponding ICD-9 diagnosis code. Established by the American Medical Association. This is one of the medical billing terms we use a lot.

Date of Service (DOS) - Date that health care services were provided.

Day Sheet - Summary of daily patient treatments, charges, and payments received.

Deductible - amount patient must pay before insurance coverage begins. For example, a patient could have a 00 deductible per year before their health insurance will begin paying. This could take several doctor's visits or prescriptions to reach the deductible.

Demographics - Physical characteristics of a patient such as age, sex, address, etc. necessary for filing a claim.

DME - Durable Medical Equipment - Medical supplies such as wheelchairs, oxygen, catheter, glucose monitors, crutches, walkers, etc.

DOB - Abbreviation for Date of Birth

Dx - Abbreviation for diagnosis code (ICD-9-CM).

Electronic Claim - Claim information is sent electronically from the billing software to the clearinghouse or directly to the insurance carrier. The claim file must be in a standard electronic format as defined by the receiver.

E/M - Evaluation and Management section of the CPT codes. These are the CPT codes 99201 thru 99499 most used by physicians to access (or evaluate) a patients treatment needs.

EMR - Electronic Medical Records. Medical records in digital format of a patients hospital or provider treatment.

EOB - Explanation of Benefits. One of the medical billing terms for the statement that comes with the insurance company payment to the provider explaining payment details, covered charges, write offs, and patient responsibilities and deductibles.

ERA - Electronic Remittance Advice. This is an electronic version of an insurance EOB that provides details of insurance claim payments. These are formatted in according to the HIPAA X12N 835 standard.

Fee Schedule - Cost associated with each treatment CPT medical billing codes.

Fraud - When a provider receives payment or a patient obtains services by deliberate, dishonest, or misleading means.

Guarantor - A responsible party and/or insured party who is not a patient.

HCPCS - Health Care Financing Administration Common Procedure Coding System. (pronounced "hick-picks"). This is a three level system of codes. CPT is Level I. A standardized medical coding system used to describe specific items or services provided when delivering health services. May also be referred to as a procedure code in the medical billing glossary.

The three HCPCS levels are:

Level I - American Medical Associations Current Procedural Terminology (CPT) codes.

Level II - The alphanumeric codes which include mostly non-physician items or services such as medical supplies, ambulatory services, prosthesis, etc. These are items and services not covered by CPT (Level I) procedures.

Level III - Local codes used by state Medicaid organizations, Medicare contractors, and private insurers for specific areas or programs.

HIPAA - Health Insurance Portability and Accountability Act. Several federal regulations intended to improve the efficiency and effectiveness of health care. HIPAA has introduced a lot of new medical billing terms into our vocabulary lately.

HMO - Health Maintenance Organization. A type of health care plan that places restrictions on treatments.

ICD-9 Code - Also know as ICD-9-CM. International Classification of Diseases classification system used to assign codes to patient diagnosis. This is a 3 to 5 digit number.

ICD 10 Code - 10th revision of the International Classification of Diseases. Uses 3 to 7 digit. Includes additional digits to allow more available codes. The U.S. Department of Health and Human Services has set an implementation deadline of October, 2013 for ICD-10.

Inpatient - Hospital stay longer than one day (24 hours).

Maximum Out of Pocket - The maximum amount the insured is responsible for paying for eligible health plan expenses. When this maximum limit is reached, the insurance typically then pays 100% of eligible expenses.

Medical Assistant - Performs administrative and clinical duties to support a health care provider such as a physician, physicians assistant, nurse, or nurse practitioner.

Medical Coder - Analyzes patient charts and assigns the correct ICD-9 diagnosis codes (soon to be ICD-10) and corresponding CPT treatment codes and any related CPT modifiers.

Medical Billing Specialist - The person who processes insurance claims and patient payments of services performed by a physician or other health care provider and vital to the financial operation of a practice. Makes sure medical billing codes and insurance information are entered correctly and submitted to insurance payer. Enters insurance payment information and processes patient statements and payments.

Medical Necessity - Medical service or procedure performed for treatment of an illness or injury not considered investigational, cosmetic, or experimental.

Medical Transcription - The conversion of voice recorded or hand written medical information dictated by health care professionals (such as physicians) into text format records. These records can be either electronic or paper.

Medicare - Insurance provided by federal government for people over 65 or people under 65 with certain restrictions. Medicare has 2 parts; Medicare Part A for hospital coverage and Part B for doctors office or outpatient care.

Medicare Donut Hole - The gap or difference between the initial limits of insurance and the catastrophic Medicare Part D coverage limits for prescription drugs.

Medicaid - Insurance coverage for low income patients. Funded by Federal and state government and administered by states.

Modifier - Modifier to a CPT treatment code that provide additional information to insurance payers for procedures or services that have been altered or "modified" in some way. Modifiers are important to explain additional procedures and obtain reimbursement for them.

Network Provider - Health care provider who is contracted with an insurance provider to provide care at a negotiated cost.

NPI Number - National Provider Identifier. A unique 10 digit identification number required by HIPAA and assigned through the National Plan and Provider Enumeration System (NPPES).

Out-of Network (or Non-Participating) - A provider that does not have a contract with the insurance carrier. Patients usually responsible for a greater portion of the charges or may have to pay all the charges for using an out-of network provider.

Out-Of-Pocket Maximum - The maximum amount the patient is responsible to pay under their insurance. Charges above this limit are the insurance companies obligation. These Out-of-pocket maximums can apply to all coverage or to a specific benefit category such as prescriptions.

Outpatient - Typically treatment in a physicians office, clinic, or day surgery facility lasting less than one day.

Patient Responsibility - The amount a patient is responsible for paying that is not covered by the insurance plan.

PCP - Primary Care Physician - Usually the physician who provides initial care and coordinates additional care if necessary.

PPO - Preferred Provider Organization. Insurance plan that allows the patient to select a doctor or hospital within the network. Similar to an HMO.

Practice Management Software - software used for the daily operations of a providers office. Typically includes appointment scheduling and billing functions.

Preauthorization - Requirement of insurance plan for primary care doctor to notify the patient insurance carrier of certain medical procedures (such as outpatient surgery) for those procedures to be considered a covered expense.

Premium - The amount the insured or their employer pays (usually monthly) to the health insurance company for coverage.

Provider - Physician or medical care facility (hospital) that provides health care services.

Referral - When a provider (typically the Primary Care Physician) refers a patient to another provider (usually a specialist).

Self Pay - Payment made at the time of service by the patient.

Secondary Insurance Claim - Insurance claim for coverage paid after primary insurance makes payment. Typically intended to cover gaps in insurance coverage.

SOF - Signature on File.

Superbill - One of the medical billing terms for the form the provider uses to document the treatment and diagnosis for a patient visit. Typically includes several commonly used ICD-9 diagnosis and CPT procedural codes. One of the most frequently used medical billing terms.

Supplemental Insurance - Additional insurance policy that covers claims fro deductibles and coinsurance. Frequently used to cover these expenses not covered by Medicare.

Taxonomy Code - Code for the provider specialty sometimes required to process a claim.

Tertiary Insurance - Insurance paid in addition to primary and secondary insurance. Tertiary insurance covers costs the primary and secondary insurance may not cover.

TIN - Tax Identification Number. Also known as Employer Identification Number (EIN).

TOS - Type of Service. Description of the category of service performed.

UB04 - Claim form for hospitals, clinics, or any provider billing for facility fees similar to CMS 1500. Replaces the UB92 form.

Unbundling - Submitting more than one CPT treatment code when only one is appropriate.

UPIN - Unique Physician Identification Number. 6 digit physician identification number created by CMS. Discontinued in 2007 and replaced by NPI number.

Write-off (W/O) - The difference between what the provider charges for a procedure or treatment and what the insurance plan allows. The patient is not responsible for the write off amount. May also be referred to as "not covered" in some glossary of billing terms.

Medical Billing Terms and Medical Coding Terminology

Gina Wysor has over 10 years experience in the medical billing industry and is the owner of a home based medical billing and coding company.

For a more comprehensive listing of Medical Billing Terms visit Visit for more information on medical billing as a or career.

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