Glossary of Billing Terms
Guide to Reading & Understanding Your Bill
Account Number - Number assigned to the patient's account by the hospital for documentation and billing purposes.
Adjustment/Contractual Adjustment - Part of the bill that the hospital does not charge the patient because of agreements they have with the patient's insurance company.
Admitting Diagnosis - The initial medical reason for the patient's condition.
Advance Beneficiary Notice (ABN) - A notice the hospital gives the patient before they receive services when Medicare is not expected to pay for some or all of the services. The notice is given so that the patient may decide whether to have the treatment and how to pay for it if Medicare denies the charges. ABNs apply to patients with traditional Medicare only.
Advance Directive - A written document, such as a living will or durable power of attorney that says how the patient wants medical decisions to be made if they lose the ability to make decisions for themselves.
Ambulatory Care - Outpatient services.
Ambulatory Care Charge - These fees support the doctor's outpatient hospital practice and are in addition to the doctor's charge. Charges are for services like outpatient nursing care, appointments, receptionists, medical records, housekeeping and facilities operations.
APC (Ambulatory Payment Classification) - A Medicare payment system for grouping and classifying similar outpatient services and procedures so Medicare can pay all hospitals the same amount.
Assignment - An agreement the patient signs that allows his or her insurance to pay the doctor or hospital directly.
Appeal - A process by which the patient, their doctor, or the hospital can object to the health plan's decision not to pay for medical services.
Applied to Deductible - Part of the bill the insurance company requires the patient to pay the hospital. See also deductible.
Assignment of Benefits - The doctor or hospital agrees to accept payment from an insurance company first and then bill the patient for any after-insurance balances. See also benefit.
Authorization Number - A reference number indicating that the patient's treatment has been approved by insurance. Also called a certification number or prior-authorization number. See also preadmission approval/certification.
Beneficiary - Someone who is covered under an insurance policy or plan.
Beneficiary/Patient Liability - The portion patients must pay out-of-pocket for medical services, including co-payments, co-insurance, and deductibles. This is in addition to the portion paid by insurance.
Benefit - The amount insurance pays for medical services.
Billed Charges - The total charges that hospitals send to insurance companies/patients prior to any negotiated contracts or discounts being applied.
Birthday Rule - This rule states that the plan of the parent whose date of birth (month and day) falls earlier in the calendar year is the primary plan for dependent children. For example, if the mother's birth date is June 10 and the father's birth date is April 23, the father's plan would be primary. If both parents have the same birth date, the health plan in effect for the longer period of time will be primary. This rule is approved by the National Association of Insurance Commissioners (NAIC).
Centers for Medicare and Medicaid (CMS) - The federal agency that operates the Medicare program and works with states to manage the Medicaid program (referred to as AHCCCS in Arizona).
Certificate of Coverage (COC) - A description of the healthcare coverage included in an insurance company's plan. The certificate of coverage is required by state laws and explains the healthcare coverage provided under the contract issued to the patient's employer.
Charity Care - Free or reduced-fee health care for patients who have financial hardship.
Children's Health Insurance Program (CHIP) - A federal program jointly funded by states and the federal government, which provides medical insurance coverage for children not covered by state Medicaid-funded programs.
Claim - the medical bill the hospital sends to the insurance company on behalf of the patient.
Clinic - An area in a hospital or separate building that provides medical care to regularly scheduled or walk-in patients for non-emergency care.
Coding - Classification of the hospital/doctor's services and supplies into a set of predetermined numbers/codes for the purpose of billing.
Coding of Claims - A process through which diagnoses and procedures from the patient's medical record are translated into numbers (codes) that computers can process for payment.
Co-Insurance - A type of cost sharing where the patient and insurance company share payment of the approved charge for covered services after payment of the deductible by the patient.
Co-Insurance Days - Medicare coverage from day 61 to day 90 of continuous inpatient hospital stay. The patient is responsible for paying for a portion of those days. After the 90th day, the patient enters their lifetime reserve days.
Collection Agency - A business that contracts with the hospital to collect money from patients for unpaid bills.
Consolidated Omnibus Budget Reconciliation Act (COBRA) - A federal law that mandates employers with 20 or more eligible employees to provide continued health insurance under their group plan to terminated employees and their dependents. COBRA generally provides continued health insurance coverage for up to 18 or 36 months. COBRA beneficiaries may be required to pay 100 percent of the premium plus an administrative fee.
Coordinated Coverage - Integrating benefits payable under more than one health insurance (for example, Medicare and retiree health benefits). Coordinated coverage is usually arranged so the insured benefits from all sources do not exceed 100 percent of allowable (discounted) medical charges. Coordinated coverage may require patients to pay some deductible or co-insurance.
Coordination of Benefits (COB) - The method for determining which insurance company is primarily responsible for payment when a patient is covered under more than one insurance plan. The insured's total benefits do not exceed 100% of the medical expenses.
Co-pay - A fixed dollar amount that a patient must pay out-of-pocket. This is often associated with an office visit or emergency room visit. For example $5, $10, or $25.
Covered Days - Days of the hospital stay that insurance company pays for in full or in part.
Date Of Service (DOS) - The date(s) medical services were provided to the patient.
Deductible - An agreed amount that a patient must pay before the insurance company will pay anything toward medical charges. Usually the amount must be met and paid by the patient each year.
Denial - A decision by insurance company not to pay for part or all of a medical bill based on a lack of medical necessity or pre-admission approval/certification, terminated coverage, or other reasons. Denied amounts may be charged to the patient. See also appeal.
Diagnosis Code - A code used for billing that describes the patient's illness.
Diagnosis-Related Groups (DRGs) - A payment system of classifying patients on the basis of diagnosis. The DRG system categorizes payments into groups based on the principal diagnosis, type of surgical procedure, complications, and other criteria.
Doctor Participation - A way in which a doctor agrees to accept an insurance company's payment level as payment in full. The bill is sent directly to the insurance company with payment made directly to the doctor. This does not include patient's co-insurance, deductibles, and non-covered services.
Duplicate Coverage Inquiry (DCI) - A request from one insurance company to another to find out whether patient has other coverage (see Coordinated Coverage).