Thursday, December 1, 2022

Medical Billing Vocabulary & Key Terms

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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. 

Medical Billing Terminologies & Key Terms

ALLOWED AMOUNT

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.

APPEAL

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.

APPLIED TO DEDUCTIBLE (ATD)

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.

ASSIGNMENT OF BENEFITS (AOB)

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.

CAPITATION

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.

CLEAN CLAIM

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.

CLEARINGHOUSE

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.”

CENTERS FOR MEDICARE AND MEDICAID SERVICES (CMS)

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.

COBRA INSURANCE

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.

CO-INSURANCE

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.

EXPLANATION OF BENEFITS (EOB)

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.

ELECTRONIC REMITTANCE ADVICE (ERA)

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.

FISCAL INTERMEDIARY (FI)

processing Medicare claims on behalf of Medicare.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA) 

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.

HEALTH MAINTENANCE ORGANIZATION (HMO)

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

INDEPENDENT PRACTICE ASSOCIATION (IPA)

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.

MANAGED CARE PLAN

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.

MEDICARE

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

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.

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)

PREFERRED PROVIDER ORGANIZATION (PPO)

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.

TRIPLE OPTION PLAN (TOP)

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

TRICARE

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

UB04

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

UTILIZATION LIMIT

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.

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Dennis
Dennis
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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