Tuesday, January 30, 2024

Medical Billing Vocabulary & Key Terms

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The process of creating medical claims to submit to insurance companies to get reimbursement for medical services provided by providers and provider groups are known as medical billing. The medical biller tracks the claim after converting a healthcare service into a billing claim to ensure the organization is paid for the work the provider completed. A skilled medical biller can boost revenue generation for the doctor’s office or healthcare facility.

Medical billing has a specialized dictionary, just like medical coding. This article will discover some of the most important terminologies and ideas in medical billing. 

The Medical Billing Process

Although several steps in the medical billing cycle might take a few days to many months, the top priorities are accurate billing and prompt follow-up. Most states mandate that insurance companies settle claims in 30 or 45 days. On the other hand, payers establish claim submission deadlines that, if missed, void coverage. Without the chance to appeal, the late claim is rejected, and the organization is not entitled to compensation.

Errors can be costly in terms of lost revenue and administrative effort at any point in the billing cycle, emphasizing how important it is for medical billers to control their part in the billing process. The efficiency of front-end and back-end billing employees is crucial to the financial stability of physician practices and provider organizations, including hospitals, health systems, and surgery centers.

Read More: 8 Key Steps of the Medical Billing Process

Medical Billing Terminologies & Key Terms


An insurance provider will pay the sum to cover a medical procedure or service. If there is any remaining amount, the patient will usually be responsible for it.


The method through which a patient or provider asks an insurance company to cover more (or, in some circumstances, none) of a medical claim. The appeal on a claim only occurs after a lawsuit has either been denied or rejected.


The sum a patient owes their healthcare provider each year to cover their deductible. The deductible for each patient differs and is determined by their insurance plan.


Direct insurance payments are made to the healthcare practitioner for treatments given to the patient. Following the successful processing of a claim, benefits are assigned.


When referring to the period between one billing statement date and the next, we use the term “billing cycle.” Billing cycles assist organizations in determining when to charge consumers and aid in estimating future income.

Billing cycles assist clients in managing their expectations of the payment schedules so they may effectively budget their money.


HCPCS is a code database describing the procedures, products, and services that Medicare beneficiaries and people covered by private health insurance plans may get.


The medical bill you forwarded to your insurance provider for payment.


A contract pays a healthcare provider a certain amount for each patient they accept and is made between the provider and the insurance payer. HMOs frequently have capitulated agreements. HMOs, assign patients to service providers who are paid a specific sum based on the patient’s age, medical history, race, and other factors, such as health risks.


A timely and error-free claim processing that an insurance payer receives. Clean claims benefit providers since they speed up the payment process and lessen the need for drawn-out appeals procedures. Many providers send their claims to organizations that specialize in producing clean claims, such as clearinghouses.


CPT code is a five-digit numbering scheme that aids in professional and outpatient facility billing standardization. For specific categories of medical services, there is a CPT code. Healthcare providers and insurance organizations can communicate and monitor billing more effectively using this code.


A billing entity is a third party independent of the healthcare provider and insurance payer. Claims are reviewed, edited, and formatted by clearinghouses before being sent to insurance payers. Sometimes, this procedure is referred to as “scrubbing.”


A government organization that controls and supervises Medicaid and Medicare health insurance. CMS also manages the HCPCS codes. CMS directly impacts over 100 million Americans’ healthcare, and this number is increasing daily.

CMS 1500

A paper form is used to send Medicare and Medicaid medical claims. One of the most popular and significant instruments in the medical billing process, a CMS 1500 is required by many commercial insurance payers for providers to submit their claims.


A federal program enables people recently fired to continue receiving health insurance from their former employer for 18 months or up to three years if they are disabled.


A form of the insurance contract in which the payer and the insured split the cost of medical services in half. Even though the terms are commonly used interchangeably, the arrangements are different: A co-pay is a set sum the patient must pay, but a co-insurance is a fixed percentage of the patient’s bill. The payer’s proportion is always listed first for these percentages.


Claims that were received, processed, and then rejected by the payer because they were deemed unpayable. These claims might not comply with the payer-patient agreement requirements, or they could have some serious problem that wasn’t discovered until after processing. A denied claim must be submitted again. The reason the claim was rejected must be ascertained.


An explanation of the services that an insurance company will cover that is linked to a completed claim and given to the patient and provider. EOBs may also explain why a claim was rejected.


This document, a digital counterpart of the EOB, outlines the amount of a claim that the insurance company would pay and, in the event that a claim is refused, why the claim was returned.


processing Medicare claims on behalf of Medicare.


Fraud is the deliberate concealment of information or misrepresentation of material facts that leads to an unauthorized benefit or payment. Illustrations of fraud making claims for services that were not delivered or utilized. They are faking statements on forms or in medical records and misrepresenting the dates, frequency, length, or nature of the services provided.


A healthcare provider is an entity that delivers medical services, such as clinics, physicians, or testing facilities.


A statement of 1996 that continues to impact the modern healthcare sector. When they switch employment or are laid off, Title II of the legislation safeguards workers’ health insurance. Title II of the Act established standards and best practices for electronic health care.


A group of medical facilities only accepts patients who need treatments from other members of its network. 


The International Classification of Disease means to as ICD. The ICD offers a system for categorizing illnesses, accidents, and fatalities. ICDs are published by the World Health Organization (WHO) to standardize the processes for documenting and following cases of diagnosed diseases around the globe, enabling research on illnesses, their causes, and treatments.


A qualified association of doctors or healthcare specialists having an HMO contract. Although their practices may not be a part of the HMO network, IPAs are hired by HMOs to provide services to patients within the HMO’s network.


A kind of insurance plan in which patients are only permitted to access medical services that are part of the insurance provider’s network. Examples of a managed care system include HMOs and IPAS.


A 1965-founded government insurance program offers medical coverage to those over 65 and those with disabilities. One famous recipient of your medical claims is Medicare, which provides coverage for more than 50 million Americans.


Medicaid offers insurance to low-income people and families. It is essentially an insurance program for individuals who cannot afford comprehensive insurance coverage. Medicaid is supported on both the state and federal levels, but each state has its own Medicaid program that is required to go above and above the minimum standards set by federal law.


Medical coding converts diagnoses, treatments, services, and equipment used in healthcare into standard medical alphanumeric codes. The diagnoses and procedure codes are derived from the documentation in the medical records, such as the transcription of the doctor’s notes, the results of the laboratory and radiologic tests, etc. Professionals in medical coding ensure that the codes are correctly applied during the medical billing process, extracting the necessary information from the supporting documentation, assigning the proper codes, and generating a claim that insurance companies will reimburse.


A modifier is a code that gives the reporting physician a way to say that a service or operation has been performed but that something specific has changed it without changing the service’s definition or code. Careful use of modifiers eliminates the need for additional method descriptions that explain the modifying situation.


Overcoding happens when the Healthcare Common Procedure Coding System and Current Procedural Terminology results in a more significant payment than is reasonable for the services rendered. Overcoding is regarded as fraud, whether done knowingly or not and can result in an audit.


Any person who receives medical treatment from trained experts is a patient. Most frequently, the patient is ill or hurt and needs care from a doctor, nurse, optometrist, dentist, veterinarian, or other healthcare professionals.

POS (Point of Service) PLAN

Patients with this insurance plan can visit a doctor not in their network if sent there and pay a higher deductible. Consider this to be a hybrid between a health maintenance organization (HMO) and basic indemnity insurance (Indemnity)


An HMO-like plan where the insurance company, not the HMO, determines which providers are included in the excellent provider network. This kind of managed care is widespread and subscription-based.


A rejected claim has one or more mistakes that were discovered before processing. Because the data criteria still needed to be completed, refused medical claims were never entered into their computer systems. If there are mistakes, the insurance company won’t pay the bill, and the rejected claim is sent back to the biller for revision. A clerical error or an ICD code that isn’t the right fit for the procedure can lead to a claim being rejected (s).


Scrubbing claims is checking them for mistakes that would lead payers (i.e., insurance companies) to reject them. Claim scrubbers check the Current Procedural Terminology (CPT) codes on your claims, whether they are people or computer programs.


Healthcare providers use a Superbill as their primary source of information for generating claims. Eventually, payers will receive these claims for payment.

A Superbill is a detailed list of all the services offered to a client. The Superbill will also include extra details on the patient visit, such as the practice’s details, CPT and ICD-10 codes, the referring physician, and more.


A third-party payer company pays medical claims that aren’t the patient (first party) or the healthcare provider (second party). Insurance companies, governmental organizations, and employers are examples of third-party payers.


The HMO, PPO, or POS coverage options are available to participants in this plan, also referred to as a “cafeteria plan.”


This is a federal health insurance program for active duty personnel, veterans, and their families, formerly known as CHAMPUS.


This is one of the most typical claim forms and has a format similar to the CMS 1500.


In healthcare, under-coding is the practice of using medical codes that do not accurately reflect the entire scope of the patient’s care. It frequently happens due to either choosing codes with the lowest level of detail or failing to abstract every code from the medical record. Similar to overcoding, it may result in claims being rejected or refused, as well as reduced revenue. However, under-coding can also result in other, more severe issues. Therefore it’s essential to prevent this mistake.


When a healthcare professional files codes for more complicated and expensive diagnoses or treatments than the provider provided, this is known as upcoding.


Medicare has an annual cap on some medical services. If a patient crosses this threshold, known as the usage limit, they may be ineligible for Medicare coverage for that procedure.

Although you would believe that only doctors and nurses need to be familiar with medical language, medical coders and billers also need to know it. To swiftly recognize and assign codes for various procedures, conditions, and equipment, a medical biller and coder must have a solid grasp of medical jargon. To ensure that the patient’s records are correct and contain all the information required for medical personnel and insurance providers, it can be helpful to have a solid understanding of this terminology to discover and assign the appropriate codes.

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I am a medical biller, a blogger and have 20 years of experience in medical billing, medical billing management, and medical assistant. My background includes positions as a clinical medical assistant, medical records technician, medical office manager, biller, and coder. I am certified by the American Academy of Professional Coders (AAPC) as a Certified Professional Coder (CPC) and by the Practice Management Institute (PMI) as a Certified Medical Office Manager (CMOM). As an office manager/biller/coder, I was a member of the Michigan Medical Group Managers, Michigan Medical Billers Association. I also served as a committee member of the Michigan Osteopathic Association of Practice Managers Education Committee.

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