Medical Billing & Coding Terminology Short Description

Medical Billing Terminology and Short Description
Medical Billing Terminology and Short Description

Medical Billing & Coding Terminology Short Description for Healthcare providers and billing companies. You can understand the process for medical billing and coding. How to send claims, what is CPT, DX, Copay, Deductible etc. Medical Billing & Coding Terminology Short Description will help you understanding the whole process.

ABN-Advanced Beneficiary Notice:

This is a kind of Waiver of Liability signed by Medicare patients. Provider cannot bill the Medicare non-covered charges to the patient, if patient has not signed the above ABN document. So it is important for Medicare patient to sign this in order to bill Medicare non-covered charges to the patient.

AMA – American Medical Association:

The AMA is the largest association of doctors in the United States found in 1847. American Medical Association main mission is to improve the nation’s health by bringing providers together.


Aging refers to the unpaid insurance claims or patient balances that are due past 30 days. We can generate a separate report of Insurance and patient balances from billing software, which we call as insurance aging and patient aging respectively.
These aging reports typically list balances by 30, 60, 90,120 and 180 days.

Allowed Amount:

Allowed amount is the amount allowed by the insurance towards each and every service. This usually goes by the Medicare policies and may vary with different insurance companies. A participating or a networked provider will accept the allowed amount and the insurance and the patient will share their responsibilities from the allowed amount and not from the billed amount by the provider. Allowed Amount=Paid Amount + Patient Responsibility.


Provider or patient can object the decision of the claim along with complete documentation, when an insurance plan does not pay the claim. It is typically has a formal policy or process established for submitting an appeal.

Assignment of Benefits:

AOB is a document signed by patient, authorizing insurance payments directly to the provider or hospital for a patient’s treatment.


It is a kind of medical billing terminology, used to define a person or persons covered by the health insurance plan.


It is the amount that the provider bills for the service rendered by him and is entered by the billing office at the time of charge entry. Billed Amount=Insurance Allowed Amount+Write off.


A fixed amount paid by insurance company to the providers over a period of time for patient’s healthcare services. This payment is not affected by the type or number of services provided.
It means contracted providers who accept capitation will receive a bulk payment (like a salary) on a periodic basis irrespective of the number of claims received by the insurance company from the same provider for a particular period. However, the contract will be reviewed by the insurance company based on the number of patients meeting the providers.

CHAMPUS – Civilian Health and Medical Program of the Uniformed Services:

It is presently known as Tricare. This is federal health insurance for US armed forces military, military retirees, National Guard and Reserve and their dependents.

CMS – Centers for Medicaid and Medicare Services:

It is formerly known as HCFA (Health Care Financing Administration). CMS is a Federal agency which administers Medicare, Medicaid, HIPPA, and other health programs.

COBRA – Consolidated Omnibus Budget Reconciliation Act:

This act was passed in 1986, according to this act an individual after becoming unemployed – either voluntary or involuntary termination of employment for reasons other than gross misconduct can continue to be covered under the company’s health insurance plan up to 18 months after becoming unemployed and under certain conditions extend up to 36 months.

Contractual Adjustment:

In this medical billing term, it describes the amount of charges, a provider or hospital agrees to write off and not bill the patient as per the contract with the insurance company. The difference between the Billed amount and the Allowed amount becomes the Contractual adjustment.
Contractual Adjustment=Billed Amount-Allowed Amount.

Coordination of Benefits:

COB means whenever the patient is covered with more than one insurance plan. It is patient responsibility to update all his insurance carriers and the order of payment as which is the primary payer and which is the secondary payer.


Copay is the amount paid by patient at each visit as defined by the insured plan.

Crossover claim:

Primary insurance will process and forward a copy of the EOB to the secondary insurance. The secondary insurance will start processing based on the primary EOB. This process of sending the primary EOB by the insurance company to the secondary insurance is known as Crossover and if this happens electronically it is known as electronic Cross-Over.

Date of Service (DOS):

It is a date in which health care services were provided to the patient from provider.

Day Sheet:

Day sheet is a medical billing terminology, used to describe the summary of daily patient treatments, charges, and payments received.


Demographics are characteristics of a patient such as age, sex, address, etc.

DME – Durable Medical Equipment:

DME is medical supplies such as wheelchairs, oxygen, crutches, walkers, etc.

Electronic Funds Transfer (EFT):

This allows funds to be transferred, credited, or debited to a bank account and eliminates the need for paper checks.

EMR – Electronic Medical Records:

EMR is a medical record of patient in an electronic format treated by a physician.


Enrollee means an individual covered by health insurance.

ERA – Electronic Remittance Advice:

Electronic Remittance Advice is an electronic version EOB that provides complete details of insurance claim payments and / or the denial reason.

Fee Schedule:

It describes the cost associated with each treatment.

Fee for Service:

Fee for Service defines the claims from the providers are processed independently and paid according to the patients plan.


Fraud is a medical billing term, used to describe when a provider receives payment or a patient obtains services by deliberate, dishonest, or misleading.

GPH – Group Health Plan:

Group Health plan means for one or more employer who provide health benefits or medical care for their employees (or former employees).

Group Name:

It is used to define a name of the group by insurance company to identify insurance plan.

Group Number:

It describes a number assigned by insurance company to identify the group under which a patient is insured.


Guarantor is a responsible party or insured party who is not a patient, responsible for paying a patient’s medical bill.

Healthcare Insurance:

It is an insurance coverage to cover the cost of medical care necessary as a result of illness or injury.

Healthcare Provider:

Healthcare Provider is typically a physician, hospital, nursing facility, or laboratory that provides medical care services for a patient.

Health Care Reform Act:

It is also referred to as the Health Care Reform Bill or the Obama Health Care Plan. It is a Health care legislation championed by President Obama in 2010 to provide improved individual health care insurance or national health care insurance for Americans.

HIC – Health Insurance Claim:

This is a number assigned by the Social Security Administration to a person to identify them as a Medicare beneficiary. This unique number is used when processing Medicare claims.


It is also referred to as fee-for-service. Patient can use any provider or hospital in this is a type of commercial insurance.

In-Network or Participating Provider:

Those providers who accept the contract are known as Participating Provider or In Network Provider or Contracted Provider.


Patient admitted in hospital for more than one day (24 hours).

IPA – Independent Practice Association:

It is an organization of physicians that are contracted with a HMO plan.

Intensive Care:

Intensive Care Unit is a medical term, it means hospital providing care for patients who extremely ill or seriously injured and require closer observation or frequent medical attention.

Medical Record Number:

MRN is medical term, it is a unique number assigned by the provider or health care facility to identify the patient medical record.


Medicare Secondary Payer.

Non Covered Charge:

Non covered charge is one of the denials used to describe the procedure not covered by the patient’s health insurance plan.

NPI Number – National Provider Identifier:

It is a unique 10 digit identification number required by HIPAA and assigned through the National Plan and Provider Enumeration System (NPPES).
The format is 3-3-4 Example: 123-456-7890

Out of Network or Non-participating provider:

Those providers who do not accept the contract are known as Non-Participating Provider or Out of Network Providers or Non-Contracted Providers.


Outpatient is a medical term, used to describe treatment in a physician’s office, clinic, or day surgery facility lasting less than one day.

Paid Amount:

It describes the amount paid by the insurance company to provider or patient. Paid Amount = Allowed Amount – Patient Responsibility.

Patient Responsibility:

It is medical billing terminology, used to describe the amount a patient is responsible for paying that is not covered by the insurance plan.
This is the balance percentage of reimbursement that the patient has to pay according to his policy. This is paid either by the patient or his secondary insurance if he has one.

Primary Care Physician:

PCP is also known as referring physician. PCP provides initial care and if it is necessary, refers to specialist for additional care


Preauthorization is a process of obtaining authorization from the insurance company to cover certain healthcare services before the services performed.


Precertification means that the provider must contact the health plan prior to admitting a patient into hospital.


Predetermination is the payment insurance will pay for the services before treatment.


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

PHI-Protect Health Information:

As per the HIPAA, any information on a patient about the status of their health, treatment, or payments should be protected.


Provider is a physician, who provides health care services to patients.

PTAN-Provider Transaction Access Number:

This is a unique number issued by Medicare Administrative Contractors to all the contracted providers with Medicare and this should be used in all the claims submitted to Medicare.

Referring Provider:

Provider usually a primary care physician refers a patient to another provider typically a specialist.


In some cases, the insurance might incorrectly pay in excess, and the provider is liable to pay it back and it is known as REFUND.
They are mainly split into 3:
 Take Back: In this case, the excess payment made by the insurance will be requested by them to the provider to give back.
 Pay Back: In this case when the provider finds that he has received excess payment he will pay it back.
 Offset: When the amount that is paid in excess is adjusted on future claims from the same provider is known as an Offset.

Remittance Advice:

Remittance Advice also called as EOB. It is a document which explains about the adjudication of the claim by insurance company.


Self-pay is the medical billing term, that describes the payment made at the time of service by the patient.

Secondary Insurance Claim:

Secondary Insurance is also called as secondary payer, it usually process and covers the claim after the primary insurance makes payment.

Skilled Nursing Facility:

Skilled Nursing Facility is a nursing home or facility, which provides a high level of specialized care for long-term or acutely ill patients. A Skilled Nursing Facility is an alternative to an extended hospital stay or home nursing care.

Social Security Number (SSN):

This is a unique 9-digit number assigned to all the citizens of the USA.
The format is usually 3-2-4 Example: 123-456-789.


Signature on File.


Specialist is a one who specialized in a specific area of medicine.


Subscriber also called as policy holder. It is a medical Billing terminology, used to describe the person or organization that pays health insurance premiums.

Taxonomy Code:

Taxonomy code is a 10 character alpha numeric code, used to identify a provider’s specialty and area of specialization.

Term Date:

Term date is the date the insurance policy is expired or ended.

Tertiary Insurance:

It is also called as third insurance policy, which covers the claim after the primary and secondary insurance policy. Tertiary policy is useful to fill in the gaps in cover.

Third Party Administrator (TPA):

Third Party Administrator is an independent corporate entity or person, who administers group benefits, claims and administration for a self-insured company or group.

TIN – Tax Identification Number:

This is a unique 9- digit number assigned to all the providers in the USA.
The format is 3-3-3. Example: 123-456-789.

TOS – Type of Service:

Type of Service is the description of the category of service performed.


Unbundling is medical billing terminology, it occurs when submitted with several procedure codes when only single comprehensive code is necessary.

Untimely Filing:

This is one of the fatal denials in Medical, it is a claim submitted after the time frame from the DOS. Time frame usually depends on the insurance company. This normally happens due to the ignorance or negligence of the Medical Billing Company

UPIN – Unique Physician Identification Number:

It is a 6 digit physician identification number created by CMS. It’s replaced by NPI number in the year 2007.

Workers Comp:

Workers Compensation is insurance that covers employee’s medical benefits and wages for work related injury or illness.


It is typically, reference to the difference between what the physician billed and the insurance allowed amount as per the contract.
Write off =Billed Amount – Allowed Amount.

ZIP Code (Zonal Improvement Plan):

This is usually a 5 digit number in the format 12345 and might also have extended ZIP which is usually a 4 digit number.
Example: 12345-6789.


There is the main medical billing terminology List, Abbreviations that we commonly come across in medical billing process of United States.