Plain-English definitions of the codes, claims, denials, and processes that drive every encounter. Bookmark it. Send it to your front desk.
The code sets and IDs every billable encounter touches.
Five-digit codes maintained by the American Medical Association that describe medical, surgical, and diagnostic services. The primary procedure code set used to bill outpatient and physician services in the United States. Updated annually by the AMA.
#International Classification of Diseases, 10th Revision, Clinical Modification. The diagnosis code set used to justify medical necessity for the procedure performed. Codes range from three to seven characters and are required on every U.S. claim. ICD-11 adoption in the U.S. is not yet scheduled.
#The procedure coding system used for inpatient hospital services in the U.S. Distinct from CPT, which covers outpatient and physician services. Codes are seven alphanumeric characters.
#Five-character codes maintained by the American Dental Association that describe dental procedures. Each code starts with the letter D. CDT is to dental what CPT is to medical.
#Code set covering services and supplies not in CPT, especially durable medical equipment, ambulance services, drugs administered in the office, and Medicare-specific services. Level I HCPCS is CPT itself; Level II HCPCS is the alphanumeric code set (J-codes for drugs, A-codes for transport, etc.).
#A 10-digit numeric identifier issued by CMS to every provider and provider organization in the U.S. Type 1 NPI is for individual providers. Type 2 NPI is for organizations (group practices, hospitals, clinics). Required on every claim.
#A unique 11-digit identifier for prescription drugs and some OTC products. Required when billing drugs administered in office (J-codes), especially under Medicaid, where the NDC drives reimbursement and rebates.
#Two-character append to a CPT code that gives more information without changing the procedure. Common examples: -25 (significant separately identifiable E/M on the same day as a procedure), -59 (distinct procedural service), -76 (repeat by same provider), -GY (statutorily excluded), -95 (synchronous telehealth).
#The federal tax ID a practice uses to bill insurance. Sole proprietors may bill under their SSN; group practices use an EIN. Payer credentialing is tied to the TIN, so changing TIN typically requires re-credentialing.
#A two-digit code indicating where the service was rendered. Common: 11 (office), 12 (home), 22 (outpatient hospital), 21 (inpatient hospital), 02 (telehealth other than home), 10 (telehealth in home), 31 (skilled nursing facility).
#Coverage terms patients ask about and front desks need at check-in.
The amount the patient or their employer pays the insurance company every month to keep coverage active. Paid regardless of whether services are used.
#The amount the patient must pay out of pocket each plan year before insurance starts paying. Family deductibles apply to the household; individual deductibles apply per person. Resets at the start of each plan year.
#A fixed dollar amount the patient pays per visit or service (e.g., $30 per primary care visit, $50 per specialist). Usually due at check-in. Independent of the deductible in most plans.
#A percentage of the allowed amount the patient pays after the deductible is met (e.g., 20%). The plan pays the remaining percentage up to the out-of-pocket maximum.
#The most the patient will pay in a plan year for covered services. Once met, the plan pays 100% for the rest of the year. Includes deductible, copays, and coinsurance; excludes premiums.
#Providers who have a contract with the insurance plan. Patients pay less. Provider accepts the contracted rate as full payment.
#Providers without a contract with the plan. Patient cost share is higher and may include balance billing (where allowed by state law and the No Surprises Act).
#The maximum the insurance plan will pay for a service. The provider writes off the difference between billed charge and allowed amount. Patient cost share is calculated against the allowed amount, not the billed charge.
#A payment arrangement where the provider receives a fixed per-member-per-month amount regardless of services rendered. Common in HMO and some Medicaid managed care arrangements. Provider takes utilization risk.
#Traditional payment model where the provider bills for each service performed and is reimbursed per service. Most commercial PPOs and traditional Medicare are FFS.
#The process of determining which insurance plan pays first when a patient has more than one. The primary plan pays first; secondary considers what is left. COB rules cover spouses, dependents, Medicare and employer plans, and divorce decrees.
#The person who holds the insurance policy. Distinct from the patient when the patient is a dependent. The subscriber ID drives eligibility lookups.
#The person entitled to benefits under a Medicare or Medicaid plan. Used interchangeably with subscriber in some commercial contexts.
#Federal and state payers with their own rules and forms.
Federal health insurance for people 65 and older, certain younger people with disabilities, and people with End-Stage Renal Disease. Part A covers inpatient and SNF; Part B covers outpatient and physician services; Part C is Medicare Advantage; Part D is prescription drugs.
#Private Medicare plans that provide Part A and Part B coverage and usually Part D, often with extra benefits. Run by commercial insurers under contract with CMS. Has its own networks, prior auth rules, and appeal pathways.
#Joint federal-state program providing health coverage for low-income individuals, families, pregnant women, and people with disabilities. Each state administers its own Medicaid program with state-specific rules, fee schedules, and managed care plans.
#Federal-state program providing low-cost health coverage for children in families that earn too much to qualify for Medicaid but cannot afford private coverage. Administered alongside Medicaid in most states.
#The Medicare provider enrollment system. Forms 855I (individuals), 855B (groups), 855R (reassignment), and 855O (ordering and referring) are submitted through PECOS. Revalidation is required every five years.
#Health care program for U.S. uniformed service members, retirees, and their families. Administered through regional contractors. Has its own provider authorization and referral rules.
#Federal agency providing health care to eligible U.S. veterans, including community care contracts where veterans receive services from non-VA providers paid by the VA.
#The mechanics of billing, from charge entry to deposit.
The end-to-end financial process of a healthcare encounter, from scheduling and eligibility through coding, claim submission, payment, and patient collections. Healthy RCM measures clean-claim rate, days in A/R, denial rate, and net collection rate.
#A claim that processes through the payer without errors and pays on the first submission. Clean claim rate is the percentage of claims that meet this bar; healthy practices run above 95%.
#Pre-submission review of a claim against payer-specific rules to catch errors before sending. Modern PMs and clearinghouses scrub automatically; experienced billers add manual scrubbing for high-dollar claims.
#A measure of how long it takes to get paid. Calculated as (current A/R balance / average daily charges over recent period). Healthy ranges vary by specialty; primary care typically 28 to 35 days, specialties 35 to 45.
#The age category of an unpaid claim or patient balance: 0 to 30, 31 to 60, 61 to 90, 91 to 180, and 181-plus days. Older buckets have lower collection probability.
#Confirming the patient has active coverage before the appointment. Real-time verification (270/271 EDI) returns active status, plan effective and termination dates, copay, deductible, coinsurance, and OOP max.
#Payer approval required before a service is rendered. Failure to get prior auth is a frequent denial reason and often unrecoverable without an exception. Common for imaging, surgery, certain drugs, and DME.
#The process of becoming an in-network provider with a payer. Involves verifying license, education, work history, malpractice, and meeting payer-specific requirements. Typically 60 to 120 days. Re-credentialing every 36 months for most payers, 60 for Medicare.
#A centralized database where providers post credentialing data once for many payers to pull from. Required by most commercial payers. Re-attestation needed every 120 days to keep data current.
#The step where service codes (CPT or CDT) and diagnosis codes (ICD-10) are entered into the billing system to create a claim. Errors at charge entry are the most common source of claim denials.
#Sending the claim to the payer, electronically (837 EDI) through a clearinghouse or directly via payer portal. Almost all U.S. claims are electronic; paper CMS-1500 (medical) and ADA-2024 (dental) forms are used only for limited cases.
#The electronic claim transaction format. 837P is professional (CMS-1500 equivalent), 837I is institutional (UB-04 equivalent), 837D is dental.
#Intermediary that receives claims from providers, scrubs them, and forwards to payers. Examples: Change Healthcare, Availity, Office Ally, Waystar.
#Recording payments and adjustments back to the claim. ERAs (electronic remits) auto-post; EOBs (paper remits) are scanned and posted manually.
#A payer reversing a previous payment, usually after audit or when later determining the original payment was incorrect. Common with Medicare RAC audits and commercial payment integrity reviews.
#The deadline by which a claim must be submitted to be considered for payment. Varies by payer: Medicare 365 days, many commercial 90 to 180 days, some Medicaid programs as short as 90 days. Past timely filing without exception is generally unrecoverable.
#The percentage of collectible revenue actually collected. Calculated as payments / (charges - contractual adjustments - bad debt). Healthy practices target 96% or higher.
#Payments / charges. Less informative than net collection rate because it ignores contractual write-offs that are baked into payer contracts.
#The vocabulary you will see on every EOB and remit.
A document the payer sends explaining how a claim was processed: billed, allowed, paid, patient responsibility, and any reasons for denial or reduction. Sent to both provider and patient.
#The electronic 835 EDI version of an EOB. Auto-posts to the claim in the billing system, dramatically faster than paper EOB processing.
#Direct deposit of payments into the provider's bank account, paired with the ERA that explains the deposit. Required by most payers; manual checks are increasingly rare.
#Standardized codes on EOBs and ERAs that explain why a claim or line was denied or reduced. Examples: CARC 16 (claim lacks information), 50 (not medically necessary), 96 (non-covered charges), 197 (precertification absent), 22 (covered by another payer).
#Supplemental explanation codes that go alongside CARCs to give more context. Example: RARC N130 (consult plan benefits, not covered).
#Payer refusal to pay all or part of a claim. Categorized as soft (correctable and resubmittable, like a missing modifier) or hard (not appealable, like services after coverage termination).
#Formal request for the payer to reconsider a denial. First-level appeals go to the payer with documentation and clinical justification. Second-level appeals escalate, typically to a payer medical director. State-level external review and IDR (No Surprises Act) come into play for certain disputes.
#A reduction to the billed charge applied by the payer, including contractual write-offs (the difference between billed and allowed) and corrections (e.g., bundling adjustments).
#Removing an amount from the A/R as uncollectible. Two flavors: contractual (planned, per the payer contract) and bad debt (unplanned, after collections fail).
#Payer rule that two or more procedure codes performed together must be billed as one. Driven by the National Correct Coding Initiative (NCCI) edits CMS publishes quarterly. Modifier -59 or appropriate X-modifier may unbundle when clinically warranted.
#Billing a higher-level service than was actually performed. Federally illegal (False Claims Act). Distinct from honest documentation supporting a higher-level code.
#Payer or provider reducing a billed code to a lower level. Provider downcoding is a common revenue leak when documentation supports the higher code; payer downcoding is sometimes appealable.
#The regulatory floor every billing operation must meet.
U.S. law setting standards for protecting Protected Health Information (PHI). Applies to Covered Entities (providers, payers, clearinghouses) and Business Associates (vendors handling PHI on their behalf).
#Individually identifiable health information held or transmitted by a Covered Entity or Business Associate. Includes names, dates, addresses, medical records, billing records, and any of the 18 HIPAA identifiers paired with health data.
#Required HIPAA contract between a Covered Entity and a Business Associate (e.g., billing company, EHR vendor) that defines how PHI is handled and breach responsibilities.
#Health Information Technology for Economic and Clinical Health Act. Strengthened HIPAA enforcement, mandated breach notification, and incentivized EHR adoption. Set the framework for current Office for Civil Rights (OCR) penalties.
#HHS office that investigates fraud, waste, and abuse in federal health programs. Publishes the OIG Work Plan annually with focus areas (e.g., E/M upcoding, telehealth audits, hospice billing).
#Federal law prohibiting submission of false or fraudulent claims to federal payers. Treble damages plus per-claim penalties. Whistleblowers (qui tam relators) can file suits and share recoveries.
#Prohibits physicians from referring Medicare and Medicaid patients to entities they have a financial relationship with, unless an exception applies. Strict liability statute.
#Federal criminal law prohibiting paying or receiving anything of value to induce or reward referrals for items or services payable by federal healthcare programs. Has safe harbors for legitimate arrangements.
#Federal law (effective 2022) protecting patients from surprise medical bills for emergency services and certain non-emergency services at in-network facilities by out-of-network providers. Created the federal Independent Dispute Resolution (IDR) process.
#The arbitration process under the No Surprises Act for resolving payment disputes between out-of-network providers and payers when negotiation fails.
#Reimbursement frameworks beyond traditional fee-for-service.
2015 law that ended the SGR formula and created the Quality Payment Program with two paths: MIPS and Advanced APMs.
#Medicare Quality Payment Program track that adjusts payments up or down based on performance across Quality, Promoting Interoperability, Improvement Activities, and Cost categories. Annual reporting required for most clinicians billing Medicare.
#Payment model that links reimbursement to quality and cost outcomes. Examples: Medicare Shared Savings Program ACOs, bundled payment arrangements, primary care capitation models.
#A group of providers that coordinate care for a defined patient population and share savings (or losses) tied to quality and total cost of care.
#Reimbursement linked to outcomes and quality rather than volume of services. Encompasses APMs, capitation, shared savings, and bundled payments.
#A set of quality measures used by health plans to compare performance. Reported annually. Increasingly tied to provider compensation and value-based contracts.
#Hierarchical Condition Categories. A model that adjusts payment based on the documented health status of the patient population, used in Medicare Advantage and ACA marketplace plans. Accurate ICD-10 documentation drives risk scores and reimbursement.
#If a definition raised more questions than it answered, our team will walk through your specific scenario. No sales pressure.
30-minute free billing audit. We'll surface the leaks (undercoding, denials never appealed, eligibility errors) and quantify the dollars you can recover this quarter.
