Medical Billing Glossary

Advance Beneficiary Notice of Noncoverage. A written notice Medicare requires providers to give patients before providing a service Medicare likely won't cover, informing them they may be responsible for payment.

Money owed to a practice for services already rendered but not yet paid. A/R aging tracks how long balances have been outstanding — typically in buckets of 0–30, 31–60, 61–90, and 90+ days.

The process by which a payer reviews, evaluates, and makes a payment decision on a submitted claim.

The maximum amount a payer will reimburse for a covered service. The difference between the billed charge and the allowed amount is typically written off as a contractual adjustment.

A formal request to a payer to reconsider a denied or underpaid claim. Most payers have multiple levels of appeal — internal, external, and administrative law judge for Medicare.

A process by which a patient authorises their insurer to pay the provider directly rather than reimbursing the patient.

Approval from a payer obtained before a service is rendered, confirming the payer will cover the service. Required for many procedures, specialist visits, and high-cost medications.

A HIPAA-required contract between a covered entity (such as a medical practice) and a business associate (such as a billing company) that handles protected health information on their behalf.

The full amount a provider bills for a service before any payer adjustments or write-offs. Typically higher than the expected reimbursement.

The practice of combining multiple services or procedures into a single payment. Payers use bundling rules (enforced via NCCI edits) to prevent billing separately for services they consider part of a larger procedure.

A centralised online database used by commercial payers to collect and verify provider credentialing information. Providers must re-attest every 120 days or risk claim holds across all participating payers.

A payment model where a provider receives a fixed amount per enrolled patient per month, regardless of the number or nature of services provided.

The Council for Affordable Quality Healthcare. Operates the CAQH ProView database used for provider credentialing.

The process of entering billed services and associated codes into the practice management system for claim generation.

Automated and manual review of a claim before submission to identify errors or missing information that would cause a denial.

A claim submitted with all required information, correctly formatted, with no errors that would prevent processing. Industry benchmark: 98% first-pass clean claim rate.

Centers for Medicare and Medicaid Services. The federal agency that administers Medicare, Medicaid, and the Children's Health Insurance Program (CHIP).

The percentage of costs a patient pays after meeting their deductible. For example, if a payer covers 80%, the patient's co-insurance is 20%.

A fixed amount a patient pays for a covered service at the time of the visit, regardless of the total charge.

Current Procedural Terminology. A standardised code set (maintained by the AMA) used to describe medical procedures and services on insurance claims.

The process of verifying a provider's qualifications, licensure, and professional history before granting them privileges to practice or bill with a payer or institution.

The amount a patient must pay out-of-pocket before their insurance begins to cover costs. Deductibles reset annually.

A payer's refusal to reimburse a submitted claim. Denials can be hard (not payable under any circumstances) or soft (payable with additional information or correction).

The percentage of claims denied by payers. The national average reached 12.4% in 2025. A well-managed billing operation maintains a denial rate below 5%.

Durable Medical Equipment. Medical equipment prescribed for home use — wheelchairs, walkers, CPAP machines. Billed with HCPCS codes.

Date of Birth. Required on all claims for patient identification and eligibility verification.

CPT codes 99202–99215 (and others) used to bill for patient evaluation and management visits. The 2021 AMA guidelines significantly revised how E&M levels are selected.

Electronic Data Interchange. The standard format for electronic transmission of healthcare claim data between providers and payers.

Confirming a patient's insurance coverage, benefits, co-pay, deductible, and prior authorisation requirements before or at the time of service.

Explanation of Benefits. A document from a payer explaining how a claim was processed — what was paid, what was denied, and the patient's responsibility.

Electronic Remittance Advice. The electronic version of an EOB, sent by payers to providers detailing claim payment decisions.

A payer's list of maximum reimbursement amounts for covered services. Providers who accept assignment agree to accept the fee schedule amount as payment in full.

The percentage of claims that are accepted and paid on first submission without requiring correction or resubmission. Industry benchmark: 98%.

A defined time period following a surgical procedure during which the surgeon's post-operative services are considered included in the surgical fee and may not be billed separately.

Healthcare Common Procedure Coding System. A standardised coding system used for billing Medicare and Medicaid. Level I codes are CPT codes; Level II codes cover supplies, equipment, and non-physician services.

Health Insurance Portability and Accountability Act. Federal law establishing privacy and security standards for protected health information (PHI).

International Classification of Diseases, 10th Revision. The standardised code set used to describe diagnoses and conditions on medical claims in the US. ICD-10-CM has over 70,000 codes.

A Medicare billing method where services provided by a non-physician (PA, NP, nurse) under a physician's direct supervision can be billed under the physician's NPI at the full physician rate.

Local Coverage Determination. A payer (typically a Medicare Administrative Contractor) decision about whether a specific service is covered in a specific geographic area.

Length of Stay. Used in hospital billing to determine appropriate DRG assignment and facility reimbursement.

A two-digit code appended to a CPT code to indicate that a service was altered in some way without changing its definition. Common modifiers include 25 (separate E&M on same day as procedure) and 59 (distinct procedural service).

National Coverage Determination. A Medicare decision about whether a specific service is covered nationwide.

National Correct Coding Initiative Edits. CMS rules that prevent improper unbundling of procedure codes. Violations result in automatic claim denial.

National Provider Identifier. A unique 10-digit identification number required for all healthcare providers who transmit health information electronically. Type 1 = individual provider; Type 2 = group/organisation.

The maximum amount a patient must pay in a plan year before the payer covers 100% of costs. Tracking patient OOP maximums can improve collections timing.

See Authorization. Approval from a payer confirming coverage of a service before it is rendered.

Provider Enrollment, Chain, and Ownership System. The online Medicare enrollment system. Migrated to a new AWS platform in May 2026 with mandatory MFA requirements.

Protected Health Information. Any individually identifiable health information covered by HIPAA privacy rules.

A two-digit code on claims indicating where a service was performed (e.g., 11 = office, 21 = inpatient hospital, 02 = telehealth).

Revenue Cycle Management. The full financial process from patient scheduling to final payment collection. Includes eligibility, coding, billing, denial management, and A/R.

Payment from a payer to a provider, accompanied by an ERA or EOB explaining how claims were processed.

Relative Value Unit. The Medicare payment calculation unit. Each CPT code has an assigned RVU; the payment equals the RVU multiplied by the Medicare conversion factor.

Subjective, Objective, Assessment, Plan. A standard medical documentation format. The quality and completeness of SOAP notes directly affects coding accuracy and audit risk.

A form used by providers to document services rendered during a visit. The source document for charge entry and claim generation.

The deadline by which a claim must be submitted to a payer. Varies by payer — Medicare requires 1 year from date of service; commercial payers range from 90 days to 2 years. Claims filed after the deadline are unrecoverable.

Tax Identification Number. Used on claims to identify the billing entity (practice or group). Must match the payer's records exactly or the claim will reject.

Incorrectly billing separate codes for components of a procedure that should be billed as a single code. A compliance risk and a frequent trigger for payer audits.

Billing for a higher-level service than was actually provided. A compliance violation that can trigger audits, recoupment, and exclusion from Medicare.

An amount removed from A/R that a practice has determined is uncollectible. Includes contractual adjustments (payer contractual write-offs) and bad debt (patient balances deemed uncollectible).