Glossary of Terms

The following is a glossary of billing and insurance terminology to help answer your questions.


Account Number — Number you're given by your doctor or hospital for a medical visit.

Actual Charge — The amount of money a doctor or supplier charges for a certain medical service or supply. This amount is often more than the amount an insurance plan approves.

Adjustment — The portion of your bill that your doctor or hospital has agreed not to charge you.

Admitting Diagnosis — Words that your doctor uses to describe your condition.

Advance Beneficiary Notice (ABN) — A notice the hospital or doctor gives you before you're treated, telling you that Medicare will not pay for some treatment or services. The notice is given to you so that you may decide whether to have the treatment and how to pay for it.

Advance Medical Directive — Written ahead of time, a healthcare advance directive is a written document that says how you want medical decisions to be made if you lose the ability to make decisions for yourself. A healthcare advance directive may include a Living Will and a Durable Power of Attorney for healthcare.

Ambulatory Payment Classifications (APC) — A Medicare payment system that classifies outpatient services so Medicare can pay all hospitals the same amount.

Ambulatory Care — All types of health services that do not require an overnight hospital stay.

Amount Not Covered — What your insurance company does not pay. It includes deductibles, co-insurances, and charges for non-covered services.

Amount Payable by Plan — How much your insurer pays for your treatment, minus any deductibles, co-insurance, or charges for non-covered services.

Ancillary Service — Services you need beyond room and board charges, such as laboratory tests, therapy, surgery and the like.

Appeal — A process by which you, your doctor, or your hospital can object to your health plan when you disagree with the health plan's decision to not pay for your care.

Applied to Deductible — Portion of your bill, as defined by your insurance company, that you owe your doctor or hospital.

Authorization Number — A number stating that your treatment has been approved by your insurance plan. Also called a Certification Number or Prior-Authorization Number.


Balance Bill — How much doctors and hospitals charge you after your health plan, insurance company, or Medicare have paid its approved amount.

Beneficiary — Person covered by health insurance.

Beneficiary Eligibility Verification — A way for doctors and hospitals to get information about whether you have insurance coverage.

Beneficiary Liability — A statement that you are responsible for some treatments or charges.

Benefit — The amount your insurance company pays for medical services.


Case Management — A way to help you get the care you need, especially when you need preauthorized care from several services. Usually a nurse helps arrange for your care.

Centers for Medicare and Medicaid (CMS) — The federal agency that runs the Medicare program. In addition, CMS works with the States to run the Medicaid program. CMS works to make sure that the beneficiaries in these programs are able to get high quality healthcare.

Certificate of Coverage (COC) — A description of the benefits included in a carrier's plan. The certificate of coverage is required by state laws and represents the coverage provided under the contract issued to the employer.

Charity Care — Free or reduced-fee 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 — Your medical bill that is sent to an insurance company for processing.

COBRA Insurance — Health insurance that you can buy when you lose your job. It is generally more expensive than insurance provided through your job but less expensive than insurance purchased on your own when you are unemployed.

Coinsurance — The cost sharing part of your bill that you have to pay.

Coinsurance Days (Medicare) — Hospital Inpatient Medicare coverage from day 61 to day 90 of continuous hospitalization. You are responsible for paying for part of those days. After the 90th day, you enter your "Lifetime Reserve Days."

Consolidated Omnibus Budget Reconciliation Act (COBRA) — A federal law that requires employers to offer continued health insurance coverage to certain employees and their beneficiaries whose group health insurance coverage has been terminated. Applies to employers with 20 or more eligible employees. Typically, COBRA makes continued coverage available for up to 18 or 36 months. COBRA enrollees may be required to pay 100 percent of the premium, plus an additional 2 percent.

Contractual Adjustment — A part of your bill that your doctor or hospital must write off (not charge you) because of billing agreements with your insurance company.

Coordinated Coverage — Integrating benefits payable under more than one health insurance (for example, Medicare and retiree health benefits). Coordinated coverage is typically arranged so the insured benefits from all sources not exceeding 100 percent of allowable medical expenses. Coordinated coverage may require beneficiaries to pay some deductible or co-insurance.

Coordination of Benefits (COB) — A way to decide which insurance company is responsible for payment if you have more than one insurance plan.

Covered Benefit — A health service or item that is included in your health plan, and that is paid for either partially or fully.


Deductible — How much cost sharing that you must pay for medical services often before your insurance company starts to pay.

Discount — Dollar amount taken off your bill, usually because of a contract with your hospital or doctor and your insurance company.

Duplicate Coverage Inquiry (DCI) — a request to an insurance company or group medical plan by another insurance company or medical plan to find out whether other coverage exists (see Coordinated Coverage).


Eligible Payment Amount — Medical services that an insurance company pays for.

Employee Retirement Income Security Act of 1974 (ERISA) — This law mandates reporting, disclosure of grievance and appeals requirements and financial standards for group life and health. Self-insured plans are regulated by this law.

Explanation of Benefits (EOB/EOMB) — The notice you receive from your insurance company after getting medical services from a doctor or hospital. It tells you what was billed, the payment amount approved by your insurance, the amount paid, and what you have to pay.


Federal Tax ID Number — A number assigned by the federal government to doctors and hospitals for tax purposes.

Financial Responsibility — How much of your bill you have to pay.

Fiscal Intermediary (FI) — A Medicare agent that processes Medicare claims.

Fraud and Abuse — Fraud: To purposely bill for services that were never given or to bill for a service that has a higher reimbursement than the service produced. Abuse: Payment for items or services that are billed by mistake by providers, but should not be paid for by the insurance plan. This is not the same as fraud.


Guarantor — Someone who has agreed to pay the bill.


Healthcare Provider — Someone who provides medical services, such as doctors, hospitals, or laboratories. This term should not be confused with insurance companies that "provide" insurance.

Health Insurance — Coverage that pays benefits for sickness or injury. It includes insurance for accidents, medical expenses, disabilities, or accidental death and dismemberment.

Health Maintenance Organization (HMO) — An insurance plan that pays for preventive and other medical services provided by a specific group of participating providers.

HIPAA — Health Insurance Portability and Accountability Act. This federal act sets standards for protecting the privacy of your health information.


Insured Group Name — Name of the group or insurance plan that insures you, usually an employer.

Insured Group Number — A number that your insurance company uses to identify the group under which you are insured.


Laboratory — Charges for blood tests and tests on body tissue samples, such as biopsies.

Lifetime Reserve Days (Medicare) — Under Medicare, you have a lifetime reserve of 60 more days of inpatient services after you use the first 90 benefit days. You must pay a fixed amount for each day of service.


Managed Care — An insurance plan that requires patients to see doctors and hospitals that have a contract with the managed care company, except in the case of medical emergencies or urgently needed care if you are out of the plan's service area.

Medicaid — A state administered, federal and state funded insurance plan for low-income people who have limited or no insurance.

Medical Record Number — The number assigned by your doctor or hospital that identifies your individual medical record.

Medicare — A health insurance program for people age 65 and older. Medicare covers some people under age 65 who have disabilities or end-stage renal disease (ESRD).

Medicare + Choice — A Medicare HMO insurance plan that pays for preventive and other healthcare from designated doctors and hospitals.

Medicare Assignment — Doctors and hospitals who have accepted Medicare patients and agreed not to charge them more than Medicare has approved.

Medicare Number — Every person covered under Medicare is assigned a number and issued a card for identification to providers.

Medicare Paid Provider — The amount of your bill that Medicare paid to your doctor or hospital.

Medicare Part A — Usually referred to as Hospital Insurance, it helps pay for inpatient care in hospitals and hospices, as well as some skilled nursing costs.

Medicare Part B — Helps pay for doctor services, outpatient care, and other medical services not paid for by Medicare Part A.

Medicare Summary Notice (MSN) — The notice you receive from Medicare after getting services from your doctor or hospital. It tells you what was billed to Medicare, Medicare's approved payment, the amount Medicare paid, and what you have to pay. Also called an Explanation of Medicare Benefits (EOMB).

Medicare Supplement Policy (Medsupp) — the insurer will pay a policyholder's Medicare co-insurance, deductible and co-payments for Medicare Part A and B and may provide additional supplement benefits according to the supplement policy selected. Also called Medigap of Medicare wrap.

Medigap — Medicare Supplement Insurance that pays for some services not covered by Medicare A or B, including deductible and co-insurance amounts.

Medigap Insurance — privately purchased individual or group health insurance policies designed to supplement Medicare coverage. Benefits may include payment of Medicare deductibles, co-insurance and balance bills, as well as payment for services not covered by Medicare.

Medigap Plan — purchased by Medicare enrollees to cover co-payments, deductibles and healthcare goods or services not paid for by Medicare. Also known as a Medicare supplements policy.

Medigap Policy — a privately purchased insurance policy that supplements Medicare coverage.


Non-Participating Provider — A doctor, hospital, or other healthcare provider that is not part of an insurance plan's doctor or hospital network.


Observation — Type of service used by doctors and hospitals to decide whether you need inpatient hospital care or whether you can recover at home or in an outpatient area. Usually charged by the hour.

Out-of-Network Provider — A doctor or other healthcare provider who is not part of an insurance plan's doctor or hospital network. Same as non-participating provider.

Out-of-Pocket Costs — Costs you must pay because Medicare or other insurance does not cover them.


Part A Medicare — Medical Hospital Insurance (HI) under part A of title XVIII of Social Security Act, which covers patients for inpatient hospital, home health, hospice and limited skilled nursing facility services. Beneficiaries are responsible for deductibles and co-payments.

Part B Medicare — Medicare Supplement Medical Insurance (SMI) under Part B of Title XVII of the Social Security Act, which covers Medicare beneficiaries for physician services, medical supplies and other outpatient treatment. Beneficiaries are responsible for monthly premiums, co-payments, deductibles and balance billing.

Point-of-Service Plan (POS) — An insurance plan that allows you to choose doctors and hospitals without having to first get a referral from your primary care doctor.

Pre-Admission Approval or Certification — An agreement by your insurance company to pay for your medical treatment. Doctors and hospitals ask your insurance company for this approval before providing your medical treatment.

Preferred Provider Organization (PPO) — a program that establishes contracts with providers of medical care. Providers under such contracts are referred to as a preferred provider. Usually, the benefit contract provides significantly better benefits and lower member costs for services received from preferred providers, thus encouraging covered persons to use these providers.

Premium — (1) Amount paid periodically to purchase health insurance benefits. (2) The amount paid or payable in advance, often in monthly installments, for an insurance policy.

Prevailing Charge — A billing charge that is commonly made by doctors in a specific region or community. Your insurance company determines this charge.

Primary Care Network (PCN) — A group of doctors serving as primary care doctors.

Primary Care Physician (PCP) — A doctor whose practice is devoted to internal medicine, family/general practice, or pediatrics. Some insurance companies consider Obstetrician/gynecologists primary care physicians.

Primary Insurance Company — The insurance company responsible for paying your claim first. If you have another insurance company, it is referred to as the Secondary Insurance Company.

Provider Contract Discount — A part of your bill that your doctor or hospital must write off (not charge you) because of billing agreements with your insurance company.


Referral — Approval needed for care beyond that provided by your primary care doctor or hospital. For example, managed care plans usually require referrals from your primary care doctor to see specialists or for special procedures.

Release of Information — A signed statement from patients or guarantors that allows doctors and hospitals to release medical information so that insurance companies can pay claims.


Secondary Insurance — Extra insurance that may pay some charges not paid by your primary insurance company. Whether payment is made depends on your insurance benefits, your coverage, and your benefit coordination.

Self-Pay Discount — Patients without insurance are eligible for a 20-percent discount on their full balance if it is paid within 30 days of the service/discharge date.

Sub-Acute Care — Usually described as a comprehensive inpatient program for those who have experienced a serious illness, injury or disease, but who do not require intensive hospital services. The range of services considered sub-acute can include infusion therapy, respiratory care, cardiac services, wound care, rehabilitation services, post-operative recovery programs for knee and hip replacements, cancer, stroke and AIDS care.

Supplemental Insurance Company — An additional insurance policy that handles claims for deductible and co-insurance reimbursement.


Third Party Administrator (TPA) — an independent person or corporate entity (third party) that administers group benefits, claims and administration for a self-insured company or group.


UB-92 — A form used by hospitals to file insurance claims for medical services.

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