Medical Billing and Healthcare BPO Terms Explained: A Simple Glossary for Beginners

The people and organisations

• Provider: the doctor, hospital, lab or clinic that gives care
• Payer: the insurance company or government program that pays for care
• Patient or member: the person who receives care and holds the insurance
• Clearinghouse: a service that checks claims for errors and passes them electronically to the payer
• Medicare: the US government health program mainly for people aged 65 and over
• Medicaid: a government program for people with low income, run by individual states
• Commercial insurance: plans offered by private insurance companies, often through employers

Claims and forms

• Claim: the bill a provider sends to a payer for services given
• CMS-1500: the standard claim form used for professional services such as doctor visits
• UB-04: the standard claim form used by hospitals and other facilities
• Date of service (DOS): the date the patient received care
• Billed amount: what the provider charged
• Allowed amount: the maximum the payer agrees to pay for a service under the contract
• Adjudication: the payer's process of reviewing a claim and deciding what to pay

Coding terms

• CPT code: a code that describes the procedure or service performed
• ICD-10 code: a code that describes the patient's diagnosis or condition
• HCPCS code: codes for supplies, equipment and some services, mainly used with Medicare
• Modifier: an extra code that adds detail to a procedure code
• Medical necessity: whether a service is considered needed for the patient's condition

Money and patient responsibility

• Copay: a fixed amount the patient pays at the time of the visit
• Deductible: the amount the patient pays each year before insurance starts paying
• Coinsurance: the percentage of the cost the patient pays after the deductible
• Out-of-pocket maximum: the most a patient pays in a year before the plan pays fully
• Contractual adjustment: the difference between billed and allowed amount, which the provider writes off
• Patient responsibility: the part the patient owes after insurance

Payments and statements

• EOB (explanation of benefits): a statement from the payer explaining how a claim was processed
• ERA (electronic remittance advice): the electronic version of payment and adjustment details sent to the provider
• Payment posting: recording payments and adjustments against the claim in the billing system
• Remittance: the payment together with the details of what it covers

Denials and follow-up

• Denial: the payer refuses to pay a claim, in whole or in part
• Rejection: the claim was not accepted at all because of a format or data error, and needs correcting and resending
• Appeal: a formal request asking the payer to review and change its decision
• Timely filing: the deadline for sending a claim or appeal, which differs by payer
• Coordination of benefits (COB): rules for deciding which insurer pays first when a patient has more than one plan
• Prior authorization: approval from the payer before a service is given
• Claim adjustment reason code: a standard code that explains why a payer changed the payment
• Aging: how long a claim has been unpaid, often grouped as 0 to 30, 31 to 60, 61 to 90, 91 to 120, and over 120 days

Compliance

• HIPAA: the US law that protects the privacy and security of health information
• PHI (protected health information): any patient information covered by HIPAA
• Call reference number: the number a payer gives you for a call, which you record in your notes

How to learn these terms

1. Read this list a few times and say each definition in your own words.
2. Draw the revenue cycle on paper and mark where each term appears.
3. Make flash cards for CPT, ICD-10, EOB, ERA, copay, deductible, coinsurance and denial.
4. Practise explaining one claim from visit to payment, using these words.
5. Take a free introductory course on US medical billing if you want more depth.