Reference

Medical Billing Glossary: 90 Terms in Plain English

The words on your remittances, payer letters, and billing reports — defined simply, with the codes, deadlines, and rules that matter for a medical practice. Search a term or jump to a letter.

A

A/R Aging Report

Revenue Cycle

A report that groups unpaid balances by how long they have been outstanding. A healthy practice keeps less than about 10% of its A/R over 90 days old.

Accounts Receivable(A/R)

Revenue Cycle

Money owed to the practice for services already provided — by insurers and by patients. A/R is usually reported in aging buckets (0–30, 31–60, 61–90, 91–120, and 120+ days). See A/R recovery services.

Adjudication

Claims

The payer’s process of reviewing a claim and deciding whether to pay it, how much to pay, or why to deny it.

Advance Beneficiary Notice of Noncoverage(ABN)

Payers & Coverage

A written notice (form CMS-R-131) given to an Original Medicare patient before a service Medicare may not cover. A properly signed ABN lets the practice bill the patient if Medicare denies the service; the claim is usually marked with modifier GA.

Allowed Amount

Payers & Coverage

The maximum a payer will pay for a covered service under its fee schedule or contract — the payer’s portion plus the patient’s cost-sharing. The difference between the billed charge and the allowed amount is a contractual adjustment.

Appeal

Claims

A formal request asking a payer to reconsider a denied or underpaid claim. Traditional Medicare has five appeal levels, starting with a redetermination filed within 120 days. See denial management.

Assignment of Benefits

Payers & Coverage

A patient’s authorization for their insurer to pay the provider directly instead of reimbursing the patient.

B

Balance Billing

Payers & Coverage

Billing a patient for the difference between the provider’s charge and the payer’s allowed amount. It is prohibited for in-network providers and, under the No Surprises Act, for many out-of-network emergency and facility-based services.

Birthday Rule

Payers & Coverage

The coordination-of-benefits rule for a child covered under both parents’ plans: the plan of the parent whose birthday (month and day) comes first in the calendar year is primary.

Bundling

Coding

When a payer includes payment for one service in the payment for another, so the second service is not paid separately. Bundling rules for Medicare come from NCCI edits and often appear as CARC CO-97 on the remittance.

C

Capitation

Payers & Coverage

A payment model where the provider receives a fixed amount per patient per month, regardless of how many services the patient uses.

CAQH ProView

Credentialing

A shared online database where providers store credentialing information once for many commercial payers to access. Profiles must be re-attested every 120 days to stay active. Part of our credentialing service.

Chronic Care Management(CCM)

Coding

Monthly care-coordination services for patients with two or more chronic conditions expected to last at least 12 months, billed with codes such as 99490. A frequently under-billed service.

Claim Adjustment Reason Code(CARC)

Claims

A standard code on the remittance that explains why a claim was paid differently from what was billed — for example CO-16 (missing information) or CO-197 (no authorization). The CARC table is maintained by X12. See the common denial codes.

Claim Scrubber

Claims

Software that checks claims for coding, formatting, and payer-rule errors before submission, so they can be fixed before they reject or deny.

Clean Claim

Claims

A claim that has no errors and can be processed without the payer asking for more information.

Clean Claim Rate

Revenue Cycle

The share of claims accepted and processed on first submission without correction. Top-performing billing teams reach 95% or higher.

Clearinghouse

Claims

A company that receives claims from the practice, checks and reformats them into the payer’s required electronic format, and routes them to the payer. Clearinghouses also return rejections and remittances.

CMS-1500

Claims

The standard paper claim form for professional (physician and supplier) services. Its electronic equivalent is the 837P transaction.

Coinsurance

Payers & Coverage

The percentage of the allowed amount the patient pays after meeting the deductible — for example, 20% under Medicare Part B.

Coordination of Benefits(COB)

Payers & Coverage

The rules that decide which insurer pays first when a patient has more than one plan. Out-of-date COB information is a common cause of denials (CARC CO-22).

Copayment

Payers & Coverage

A fixed dollar amount the patient pays for a service, such as $30 for an office visit, usually collected at check-in.

Corrected Claim

Claims

A claim sent to replace one that was already processed, marked with claim frequency code 7 (replacement). Sending a changed claim as a new claim usually triggers a duplicate-claim denial.

Cost to Collect

Revenue Cycle

Total billing and collection costs divided by total cash collected. Try our cost to collect calculator.

CPT(Current Procedural Terminology)

Coding

The five-character codes, maintained by the American Medical Association, that describe medical procedures and services. CPT is updated every January 1; the 2026 update included 418 changes. See medical coding services.

Credentialing

Verifying a provider’s education, training, licensure, and history, and enrolling them with insurers so they can be paid as in-network. See provider credentialing.

Crossover Claim

Claims

A claim that Medicare automatically forwards to the patient’s secondary payer, such as Medicaid or a Medigap plan, after Medicare processes it.

D

Days in A/R

Revenue Cycle

The average number of days it takes to collect payment after a service. Calculated as total A/R divided by average daily charges. Check yours with the days in A/R calculator.

Deductible

Payers & Coverage

The amount a patient must pay each year for covered services before the insurer starts paying.

Denial

Claims

A claim the payer has processed and refused to pay, in whole or in part. Unlike a rejection, a denial must be corrected, reopened, or appealed.

Denial Rate

Revenue Cycle

The share of submitted claims that are denied on first submission. Well-run practices aim for under 5%. Use the denial rate calculator.

DMEPOS(Durable Medical Equipment, Prosthetics, Orthotics, and Supplies)

Payers & Coverage

Medical equipment and supplies such as wheelchairs, oxygen, and braces. DMEPOS suppliers enroll in Medicare separately and revalidate every three years.

Downcoding

Coding

When a payer pays a claim at a lower code level than billed — for example, paying a 99215 as a 99214. Increasingly done by automated payer review. See payer AI downcoding.

E

EDI 837

Claims

The standard electronic claim transaction: 837P for professional claims and 837I for institutional claims. Related transactions include 270/271 (eligibility), 276/277 (claim status), and 835 (remittance).

Electronic Funds Transfer(EFT)

Revenue Cycle

Direct deposit of insurance payments into the practice’s bank account. Medicare EFT enrollment uses form CMS-588.

Electronic Remittance Advice(ERA / 835)

Revenue Cycle

The electronic explanation of how a payer processed each claim — paid amounts, adjustments, and reason codes. ERAs are the starting point for payment posting and denial work.

Eligibility Verification

Revenue Cycle

Confirming before the visit that a patient’s insurance is active and what it covers. Missed eligibility checks are one of the largest sources of denials.

Evaluation and Management(E/M)

Coding

CPT codes for visits in which a provider evaluates and manages a patient’s health, such as office visits 99202–99215. Levels are chosen by medical decision making or total time. See the E/M level table.

Explanation of Benefits(EOB)

Payers & Coverage

A statement the insurer sends to the patient (and sometimes the provider) explaining how a claim was processed and what the patient owes.

F

Fee Schedule

Payers & Coverage

A list of the amounts a payer pays for each service code. Medicare’s is the Physician Fee Schedule, updated every calendar year.

G

G2211

Coding

A Medicare add-on code, payable since January 1, 2024, for the added complexity of office visits that are part of ongoing, longitudinal care for a patient.

Gold Carding

Payers & Coverage

An exemption from prior authorization for providers whose requests are almost always approved. Texas passed the first state gold-carding law in 2021; other states and some payers have followed.

Good Faith Estimate(GFE)

Compliance

A written cost estimate that the No Surprises Act requires providers to give uninsured and self-pay patients before scheduled care. If the final bill is $400 or more above the estimate, the patient can dispute it.

H

HCPCS(Healthcare Common Procedure Coding System)

Coding

Level I is CPT. Level II codes, maintained by CMS, cover items and services CPT doesn’t — drugs (J codes), supplies, ambulance, DME, and Medicare-specific services (G codes).

Hierarchical Condition Category(HCC)

Coding

Groups of diagnosis codes used to calculate patient risk scores and risk-adjusted payments, mainly in Medicare Advantage. Conditions must be documented every calendar year. The CMS-HCC V28 model is fully in effect for 2026.

HIPAA(Health Insurance Portability and Accountability Act)

Compliance

The federal law that sets privacy and security rules for protected health information and the standards for electronic billing transactions. See HIPAA compliance essentials.

I

ICD-10-CM

Coding

The diagnosis code set used on US claims. It updates every October 1, and the code set used depends on the date of service. See FY2027 ICD-10-CM changes.

In-Network

Payers & Coverage

A provider who has a contract with a health plan to accept its negotiated rates. Becoming in-network requires credentialing and contracting with each plan.

Incident-To Billing

Coding

A Medicare rule that lets certain services performed by non-physician staff be billed under the supervising physician’s NPI, at 100% of the fee schedule instead of 85%, when strict supervision and plan-of-care conditions are met.

L

Local Coverage Determination(LCD)

Payers & Coverage

A coverage policy issued by a Medicare Administrative Contractor that explains when a service is considered medically necessary in its region, often including the diagnosis codes that support it.

M

Medical Decision Making(MDM)

Coding

The framework used to choose E/M levels, based on three elements: the problems addressed, the data reviewed, and the risk of patient management. Two of the three must be met for a given level.

Medical Necessity

Payers & Coverage

The standard that a service is reasonable and needed to diagnose or treat a condition. Medical-necessity denials (often CARC CO-50) are challenged with documentation that meets the payer’s coverage policy.

Medically Unlikely Edit(MUE)

Coding

The maximum units of a service Medicare expects one provider to report for one patient on one date of service. Units above the MUE are denied.

Medicare Administrative Contractor(MAC)

Payers & Coverage

A private company that processes Medicare Part A and B claims and enrollments for a region of the country.

Medicare Advantage(MA / Part C)

Payers & Coverage

Medicare plans run by private insurers. They set their own prior authorization and credentialing rules, within CMS requirements. Since 2026, CMS-0057-F requires faster prior authorization decisions from MA plans.

MIPS(Merit-based Incentive Payment System)

Compliance

The Medicare Quality Payment Program track that adjusts Part B payments by up to ±9% based on quality, cost, improvement activities, and promoting interoperability. See MIPS reporting and the MIPS score estimator.

Modifier

Coding

A two-character code added to a CPT or HCPCS code to give the payer more information — for example 25 (separate E/M service), 59 (distinct procedure), or RT/LT (right/left side).

N

National Correct Coding Initiative(NCCI)

Coding

CMS’s quarterly-updated edits that identify code pairs that shouldn’t be billed together and the maximum units for each service.

National Coverage Determination(NCD)

Payers & Coverage

A nationwide Medicare policy on whether, and when, a service is covered. NCDs apply everywhere; LCDs apply in one contractor’s region.

National Provider Identifier(NPI)

Credentialing

The unique 10-digit number every healthcare provider uses on claims. Type 1 NPIs are for individuals; Type 2 NPIs are for organizations.

Net Collection Rate

Revenue Cycle

Payments collected divided by what could be collected after contractual adjustments. A strong rate is 95% or higher. Calculate yours with the net collection rate calculator.

No Surprises Act

Compliance

A federal law, effective January 1, 2022, that protects patients from surprise out-of-network bills for emergency care and certain care at in-network facilities, and created the good faith estimate and independent dispute resolution processes.

O

Opt-Out

Credentialing

A provider’s choice not to bill Medicare at all and to contract privately with Medicare patients instead. An opt-out affidavit lasts two years and renews automatically unless cancelled in time.

Out-of-Network(OON)

Payers & Coverage

A provider with no contract with the patient’s plan. Patients usually pay more, and claims follow the plan’s out-of-network rules.

Overpayment

Compliance

A payment the provider received but wasn’t entitled to. Medicare overpayments must generally be reported and returned within 60 days of being identified.

P

Patient Responsibility

Revenue Cycle

The portion of the allowed amount the patient owes — deductible, coinsurance, and copay. It appears on remittances with the PR group code (PR-1, PR-2, PR-3).

Payment Posting

Revenue Cycle

Recording payments and adjustments from ERAs and patient payments against each claim in the billing system, and flagging denials and underpayments for follow-up.

PECOS(Provider Enrollment, Chain, and Ownership System)

Credentialing

CMS’s online system for Medicare enrollment, revalidation, and changes of information. See Medicare enrollment services.

Peer-to-Peer Review

Payers & Coverage

A phone discussion between the treating provider and the payer’s medical reviewer about a denied or pending prior authorization or claim.

Place of Service Code(POS)

Claims

A two-digit code showing where a service was performed — for example 11 (office), 22 (hospital outpatient), 02 (telehealth not in the patient’s home), and 10 (telehealth in the patient’s home).

Prior Authorization

Payers & Coverage

Approval a payer requires before certain services are provided. Missing authorization is a leading cause of denials (CARC CO-197). See prior authorization services.

Provider Transaction Access Number(PTAN)

Credentialing

The Medicare-issued number a MAC assigns after enrollment is approved. It is used with the NPI to identify an enrolled provider or group.

R

Reassignment of Benefits

Credentialing

A provider’s authorization for a group or employer to bill and receive Medicare payment for their services. It is now filed through the CMS-855I or PECOS.

Recoupment

Revenue Cycle

When a payer recovers an overpayment by taking it out of future payments to the practice.

Redetermination

Claims

The first level of a traditional Medicare appeal, decided by the MAC. It must be filed within 120 days of the initial determination.

Rejection

Claims

A claim returned by the clearinghouse or payer before processing because of formatting or data errors. A rejected claim was never accepted, so it can simply be fixed and resubmitted.

Relative Value Unit(RVU)

Payers & Coverage

The measure Medicare uses to price services. Each code has work, practice-expense, and malpractice RVUs, adjusted for location and multiplied by the annual conversion factor.

Remittance Advice Remark Code(RARC)

Claims

A supplemental code on the remittance that adds detail to a CARC — for example, naming exactly which piece of information was missing.

Revalidation

Credentialing

Periodic re-confirmation of Medicare enrollment details — every five years for most providers and every three years for DMEPOS suppliers. Missing it deactivates billing privileges.

Revenue Cycle Management(RCM)

Revenue Cycle

Every step from scheduling and eligibility through coding, claims, payment posting, denials, and patient collections. See medical billing & RCM.

S

Superbill

Claims

An itemized form listing the services, codes, and diagnoses for a visit. Practices use it to capture charges, and out-of-network patients use it to claim reimbursement from their insurer.

T

Taxpayer Identification Number(TIN)

Credentialing

The federal tax ID (usually an EIN) the practice bills under. Payers link NPIs to a TIN, and MIPS eligibility is assessed by TIN and NPI.

Timely Filing Limit

Claims

The deadline for submitting a claim after the date of service. Medicare allows 12 months; commercial payers set their own, often much shorter, limits. Late claims deny with CARC CO-29.

Transitional Care Management(TCM)

Coding

Services (99495, 99496) for patients in the 30 days after discharge from a hospital or facility, including contact within two business days and a timely face-to-face visit.

U

UB-04

Claims

The paper claim form for institutional services, such as hospitals and facilities (also called the CMS-1450). Its electronic equivalent is the 837I.

Underpayment

Revenue Cycle

A payment below the contracted rate for a service. Underpayments don’t show up as denials, so they are only caught by comparing payments with contract rates.

Upcoding

Compliance

Billing a higher-level or more expensive code than the documentation supports. It can lead to recoupments, audits, and False Claims Act liability.

Utilization Management(UM)

Payers & Coverage

Payer programs, including prior authorization and medical-necessity review, that check whether services are appropriate before or after they are provided. Many payers outsource UM to specialty vendors.

W

WISeR Model

Payers & Coverage

A CMS Innovation Center model running from 2026 to 2031 that adds AI-assisted prior authorization to traditional Medicare for selected services in six states. See our WISeR guide.

Write-Off

Revenue Cycle

Removing a balance from A/R because it won’t be collected. Contractual write-offs are expected; write-offs from missed deadlines or unworked denials are lost revenue.

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