Glossary of Billing Terms

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Glossary of Billing Terms


Guide to Reading & Understanding Your Bill

Account Number - number the patient's visit (account) is given by the hospital for documentation and billing purposes.

Adjustment/Contractual Adjustment - part of the bill that the hospital has agreed not to charge the patient because of billing agreements they have with the patient's insurance company.

Admitting Diagnosis - the initial medical reason that was documented for the patient's condition.

Advance Beneficiary Notice (ABN) - a notice the hospital gives the patient before they receive services when Medicare is not expected to pay for some or all of the services. The notice is given so that the patient may decide whether to have the treatment and how to pay for it if Medicare denies the charges. ABNs apply to patients with traditional Medicare only.

Advance Directive - a written document, such as a living will or durable power of attorney that says how the patient wants medical decisions to be made if they lose the ability to make decisions for themselves.

Ambulatory Care - outpatient services.

Ambulatory Care Charge - these fees support the physician's outpatient hospital practice and will be in addition to the physician's charge. Charges represent services like outpatient nursing care, appointments, receptionists, medical records, housekeeping and facilities operations.

APC (Ambulatory Payment Classification) - a Medicare payment system for grouping and classifying similar outpatient services and procedures so Medicare can pay all hospitals the same amount.

Assignment - an agreement the patient signs that allows your insurance to pay the doctor or hospital directly.

Appeal - a process by which the patient, their doctor, or the hospital can object to the health plan's decision not to pay for medical services.

Applied to Deductible - part of the bill the insurance company requires the patient to pay the hospital. See also deductible.

Assignment of Benefits - the doctor or hospital agrees to accept payment from an insurance company first and then bill the patient for any after-insurance balances. See also benefit.

Authorization Number - a reference number stating that your treatment has been approved by insurance. Also called a certification number or prior-authorization number. See also preadmission approval/certification.

Beneficiary - someone who is covered under an insurance policy or plan.

Beneficiary/Patient Liability - the portion patients must pay out-of-pocket for medical services, including co-payments, co-insurance, and deductibles. This is in addition to the portion paid by insurance.

Benefit - the amount insurance pays for medical services.

Billed Charges - the total charges that hospitals send to insurance companies/patients prior to any negotiated contracts or discounts being applied.

Birthday Rule - the Birthday Rule is approved by the National Association of Insurance Commissioners (NAIC). The Birthday Rule indicates that the plan of the parent whose date of birth (month and day) falls earlier in the calendar year is the primary plan for dependent children. For example, if the mother's birth date is June 10 and the father's birth date is April 23, the father's plan would be primary. If both parents have the same birth date, the health plan in effect for the longer period of time will be primary.

Centers for Medicare and Medicaid (CMS) - the federal agency that operates the Medicare program and works with states to manage the Medicaid program (referred to as Medi-Cal in California, AHCCCS in Arizona and Medicaid in Nevada).

Certificate of Coverage (COC) - a description of the healthcare coverage included in an insurance company's plan. The certificate of coverage is required by state laws and explains the healthcare coverage provided under the contract issued to the employer.

Charity Care - free or reduced-fee health 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 - the medical bill the hospital sends to the insurance company on behalf of the patient.

Clinic - an area in a hospital or separate building that provides medical care to regularly scheduled or walk-in patients for non-emergency care.

Coding - a way hospital/physician's services and supplies are classified and defined into a set of predetermined numbers/codes for the purpose of billing.

Coding of Claims - a process through which diagnoses and procedures from the patient's medical record are translated into numbers (codes) that computers can process for payment.

Co-Insurance - a type of cost sharing where the patient and insurance company share payment of the approved charge for covered services after payment of the deductible by the patient.

Co-Insurance Days - Medicare coverage from day 61 to day 90 of continuous inpatient hospital stay. The patient is responsible for paying for a portion of those days. After the 90th day, the patient enters their lifetime reserve days.

Collection Agency - a business that contracts with the hospital to collect money from patients for unpaid bills.

Consolidated Omnibus Budget Reconciliation Act (COBRA) - a federal law that mandates employers with 20 or more eligible employees to provide continued health insurance under their group plan to terminated employees and their dependents. COBRA generally provides continued health insurance coverage for up to 18 or 36 months. COBRA beneficiaries may be required to pay 100 percent of the premium plus an administrative fee.

Coordinated Coverage - integrating benefits payable under more than one health insurance (for example, Medicare and retiree health benefits). Coordinated coverage is usually arranged so the insured benefits from all sources do not exceed 100 percent of allowable (discounted) medical charges. Coordinated coverage may require patients to pay some deductible or co-insurance.


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