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Billing & Insurance

Administrative Services Organization (ASO) - An organization that provides a wide variety of health insurance administrative services for groups that have chosen to self-fund their  health benefits.

Advanced  Beneficiary  Notice (ABN) - A form that Medicare requires all healthcare providers to use when Medicare does not pay for a service. Patients must sign the form to acknowledge that they understand they have a choice about their healthcare in the event that Medicare does not pay.

Allowable Charges - The fees which insurance companies allow for a particular service or supply.

Billing  Cycle - The period when medical offices send statements to patients, usually every 30 days.

Birthday  Rule - An informal procedure used in the health insurance industry to help determine which health plan is considered "primary,"  when individuals (usually children) are listed as dependents on more than one health plan. The health plan of the parent whose birthday comes first in the calendar year would be considered the primary plan.

Black lung  Benefits  Act - Act that provides compensation for miners with black lung (pneumoconiosis).  Requires liable mine operators to award disability payment and establishes a fund administered by the Secretary of Labor that provides disability payments to miners when the mine operator is unknown or unable to pay.

Breach of Confidentiality - When confidential information  is disclosed to a third party without  patient consent or court order.

Carve Out - Eliminating a certain specialty of health services from coverage under the healthcare policy.

Claims Processor - The facility that handles healthcare claims.

Coinsurance  - A type of cost-sharing between the insurance provider and the policyholder. After the deductible has been met, the insurance provider pays a certain  percentage of the bill, and the policyholder pays the remaining percentage.

Consultation   - When the primary care provider sends a patient to another provider, usually a specialist, for the purpose of the consulting physician rendering his or her expert opinion regarding the patient's condition. The primary care provider (PCP) does not relinquish the care of the patient to the consulting provider.

Contractual  Write-off  - When the provider agrees, through  a contractual agreement,  not to be paid the remaining amount of a fee after the patient has paid his or her deductible and coinsurance and all third-party  payers have paid their share.

Coordination of Benefits  (COB) - When a patient and spouse (or parent) are covered under two separate employer group policies, the total  benefits an insured can receive from  both groups are limited to not more than 100% of the allowable expenses, preventing the policyholder(s) from making a profit on health insurance claims. The primary plan pays benefits up to its limit, and then the secondary plan pays the difference up to its limit.

Copayment  - The amount of money the patient has to payout  of his or her own pocket.

Covered Charges - The allowed services, supplies, and procedures for which Medicare and TRICARE (and most other insurers) would pay. Covered charges include medical and psychological services and supplies that are considered appropriate care and are generally accepted by qualified professionals to be reasonable and adequate for the diagnosis and treatment  for illness, injury, pregnancy, or mental disorders, or well-child care.

Covered Expenses - Charges incurred that qualify for reimbursement  under the terms of the policy contract.

Current Procedural Terminology (CPT) Code -  Is a set of codes, descriptions and guidelines intended to describe procedures and services performed by physicians and other health care professionals or entities.

Critical  Care - The constant attention  (either at bedside or immediately available) by a physiclan in a medical crisis.

Deductible  - A certain amount of money that the patient must pay each year toward his or her medical expenses before health insurance benefits begin .

Demographic  Information   - Information  such as name, address, Social Security number, and employment.

Denial Notice - An explanation that a local coverage decision does not cover a certain item or service.

Diagnosis - The determination  of the nature of a cause of disease; the art of distinguishing  one disease from another.

Discounted  Fee-for-Service  - When a healthcare provider offers services at rates that are lower than the usual, customary, and reasonable fees.

Electronic  Claims Submission  (ECS) - A process that allows providers to use computers and applicable software programs to submit claims to a central location, such as a clearinghouse, via a Web interface. The Web interface sends the claims to the carrier system for processing.

Electronic  Medical  Record (EMR)  -  An electronic file wherein  patient's health information  is stored in a computer system. Synonymous terms for an EMR include electronic patient record, electronic health record, and computerized patient record.

Electronic  Remittance Advice (ERA) - One of several different  types of electronic formats  rather than a paper document. Payments can be posted automatically to patient accounts, allowing the health insurance professional to update accounts receivable much more quickly and accurately than if he or she had to post the payments manually.

End-Stage Renal (ESRD)-  Permanent kidney disorders requiring dialysis or transplant.

Enrollees  - Individuals who are covered under a managed care plan.

Established  Patient  - A person who has been treated  previously by the healthcare provider,  regardless of location of service, within the past 3 years.

Evaluation  and Management (E&M) Codes -  Codes found at the beginning of the CPT manual that  represent the services provided directly to the patient during an encounter that do not involve an actual procedure.

Explanation of Benefits  (EOB)  - A document prepared by the carrier that gives details of how the claim was adjudicated. It typically includes a comprehensive listing of patient information,  dates of service, payments, or reasons for nonpayment  (see remittance advice).

Fee-for-Service  (FFS)/indemnity  Plan - A traditional  type of healthcare policy whereby the provider charges a specific fee (typically the usual, customary, and reasonable fee) for each service rendered and is paid that fee by the patient or by the patient's insurance carrier (see indemnity  insurance).

Group  Insurance  - A contract between an insurance company and an employer (or other entity)  that covers eligible employees or members.  Group insurance is generally the least expensive kind of insurance, and in many cases, the employer pays part or all of the cost.

Health  Insurance  Policy  Premium  - A monthly (or quarterly)  fee paid by the policyholder.

Health  Maintenance Organization  (HMO) - An organization that provides its members with  basic healthcare services for a fixed price and for a given time period.

HMO with Point-of-Service - A health maintenance organization (HMO) members is allowed to see providers who are not in the HMO network and receive services from specialists without  first going through  a primary care physician; however, the plan pays a smaller portion of the bill than if the member had followed  regular HMO procedures. The member also pays a higher premium and a higher copayment each time the option is used.

Hospice - A facility or service that provides care for terminally  ill patients and support to their families;  either directly or on a consulting basis with the patient's physician. Emphasis is on symptom control and support before and after death.

Indemnity Insurance  - The "standard"  type of health insurance individuals can purchase, which provides comprehensive major medical benefits and allows insured individuals to choose any physician or hospital when seeking medical
care (see fee-for-services)

Inpatient  - A patient who has been formally admitted to a hospital for diagnostic tests, medical care and treatment,  or a surgical procedure, typically staying overnight.

Insurance  - A written  agreement (policy) between two entities, whereby one entity (the insurance company) promises to pay a specific sum of money to a second entity  (often an individual or another company) if certain specified undesirable events happen.

Insured - An individual who is covered by an insurer.

Insurer  - The insuring party (such as a health plan).

Lifetime  Maximum  Cap - An amount after which the insurance company does not pay any more of the charges incurred.

Lifetime  (one-time) Release of Information Form - A form that the beneficiary may sign, authorizing a life-time release of information  instead of signing an information  release form annually.

Major  Medical Insurance  - Insurance that includes treatment  for long-term, high-cost illnesses or injuries and inpatient and outpatient  expenses.

Managed Care Plan - A plan composed of a group of providers who share the financial risk of the plan or who have an incentive to deliver cost-effective,  but quality service.

Medicaid - A combination federal and state medical assistance program designed to provide comprehensive and quality medical care for low-income families with special emphasis on children, pregnant women, the elderly, the disabled, and parents with dependent children who have no other way to pay for healthcare. Coverage varies from state to state.

Medically Necessary -  Medical services, procedures, or supplies that are reasonable and necessary for diagnosis or treatment  of a patient's medical condition,  in accordance with the standards of good medical practice, performed at the proper level, and provided in the most appropriate setting.

Medicare - A comprehensive federal insurance program established by Congress by 1966 that  provides financial assistance with medical expenses to individuals 65 years or older and individuals younger than 65 with certain disabilities.

Medicare Gaps - The uninsured areas under Medicare with which elderly and disabled Americans need additional help.

Medicare HMOs - Consists of a network of physicians and other healthcare providers. Members/enrollees must receive care only from the providers in the network except in emergencies. The least expensive and most restrictive Medicare managed care plan.

Medicare Managed Care Plan - A health maintenance organization  or preferred provider organization that uses Medicare to pay for part of its services for eligible beneficiaries. It provides all basic Medicare benefits, plus some additional coverages (depending on the plan) to fill the gaps Medicare does not pay.

Medicare Part A -  Hospital insurance. Helps pay for medically necessary services, including inpatient  hospital care, inpatient care in a skilled nursing facility,  home healthcare, and hospice care.

Medicare Part B -  Medical (physicians' care) insurance financed by a combination of federal government funds and beneficiary premiums.

Medicare Part C (Medicare Advantage Plan) -  Prepaid healthcare plans that offer regular Part A and Part B Medicare coverage in addition to coverage for other services. Formerly called Medicare -Choice.

Medicare Part D (Prescription Drug Plan) -  Pays a portion of prescription drug expenses and cost sharing for qualifying individuals.

Medicare Secondary  Payer (MSP) - The term used when Medicare is not responsible for paying first when the beneflciary is covered under another insurance policy.

Medicare Supplement  Plans -  Private insurance plans specifically designed to provide coverage for some of the services that  Medicare does not pay, such as Medicare's deductible and coinsurance amounts and for certain services not allowed by Medicare. Also known as Medigap insurance.

Medicare Supplement  Policy - A health insurance plan sold by private insurance companies to help pay for healthcare expenses not covered by Medicare and its deductible and coinsurance.

Medigap Insurance  -  Policies sold by private insurance companies to fill "gaps" in the original (fee-for-service)  Medicare plan coverage. Policies specifically designed to supplement  Medicare benefits (see Medicare supplement plans).

Military Health System - Total healthcare system of the U.S. uniformed services. Military Health System includes military treatment  facilities and various programs in the civilian healthcare market, such as TRICARE.

Modifiers  - Words that are added to main terms to supply more specific information  about the patient's clinical picture. Modifiers provide the means by which the reporting  healthcare provider can indicate that a service or procedure performed has been altered by some specific circumstance, but has not changed its definition  or code.

Network  - An interrelated  system of people and facilities that communicate with one another and work together  as a unit. An approved list of physicians, hospitals, and other problems.

New Patient  - A person who is new to the practice, regardless of location of service, or one who has not received any medical treatment  by the healthcare provider or any other provider in that same office within the past 3 years.

Noncovered  Services - Situations in which an item or service is not covered under Medicare.

Out-of-Pocket Maximum  - After a patient has paid a certain amount of medical expenses, the usual, customary, and reasonable (allowed) fee for covered benefits is paid in full by the insurer.

Outpatient - A patient who has not been officially admitted to a hospital, but received diagnostic test or treatment  in that facility or clinic connected with it.

Payer of Last Resort - After all other available third-party  resources meet their legal obligation to pay claims, the Medicaid program pays for the care of an individual eligible for Medicaid.

Point-of-Service  (POS) plan - A 'hybrid' type of managed care, also referred to as an open-ended HMO, that allows patients either to use the health maintenance organization  provider or to go outside the plan and use any provider they choose.

Preauthorization  - A cost-containment  procedure required by most managed healthcare and indemnity  plans before a provider carries out specific procedures or treatments  for a patient. The insured must contact the insurer before hospitalization or surgery and receive prior approval for the service. Preauthorization does not guarantee payment.

Precertification  - A process whereby the provider (or a member of his or her staff) contacts the patient's managed care plan before inpatient admissions and performance of certain procedures and services to verify the patient's eligibility and coverage for the planned service.

Predetermination  - A method used by some insurance companies to find out whether or not a specific medical service or procedure would be covered.  Most insurance companies request a written  statement from the healthcare provider with the specific CPT codes for the proposed procedures before providing a predetermination  of benefits.

Preexisting  conditions  - Physical or mental conditions of an insured individual that existed before the issuance of a health insurance policy or that existed before issuance and for which treatment  was received. Preexisting conditions are
excluded from coverage under some policies, or a specified length of time must elapse before the condition is covered.

Preferred  provider  organization   (PPO) - A group of hospitals and physicians that agree to render particular services to a group of people, generally under contract with a private insurer. These services may be furnished at discounted rates if the members receive their health care from member providers, rather
than selecting a provider outside of the network.

Premium  - A specific sum of money paid by the insured to the insurance company in exchange for financial protection against loss.

Primary  Care Physician  (PCP) - In a preferred provider organization plan, a specific provider who oversees the member's total healthcare treatment.

Principal  Diagnosis  - The reason for admission to the acute care facility.

Referral  - A request by a healthcare provider for a patient under his or her care to be evaluated or treated,  or both, by another provider, usually a specialist.

Reimbursement  - Payment to the insured for a covered expense or loss experienced by or on behalf of the insured.

Release of Information - A form signed by the patient, authorizing a release of medical information  necessary to complete the insurance claim form. Typically, a release of information  is valid for only 1 year.

Remittance  Advice (RA) - A paper or electronic form sent by Medicare to the service provider that explains how payment was determined for a claim (or claims). Formerly referred to as an explanation of benefits.

Remittance  Remark  Codes - Codes that represent non-financial  information  on a remittance advice.

Secondary  Claim - The claim the secondary insurer (the insurance company who pays after the primary carrier) receives after the primary insurer pays its monetary obligations.

Specialist  - A physician who is trained in a certain area of medicine .

Spend Down  - Depleting private or family finances to the point where the individual or family becomes eligible for Medicaid assistance.

Supplemental   Coverage -  Benefit add-ens to health plans, such as vision, dental, or prescription  drug coverage.

Supplementary  Medical Insurance  (SMI) - See Medicare supplement plans and Medigap insurance.

Third  Party  (party of the third  part)  - In legal language, the insurance company in the implied contract between the physician and the patient.

Third  Party  Administrator (TPA) - A person or organization who processes claims and performs other contractual administrative services. Often hired by self-insured groups to provide claims-paying functions.

Workers' Compensation - Commonly referred to as workers' comp or WC, a type of insurance regulated by state laws that pays medical expenses and partial loss of wages for workers who are injured on the job or become ill as a result of job-related  circumstances.