Glossary
The revenue cycle,
in plain English.
Short, precise definitions of the terms you meet in medical billing, with formulas for the metrics that matter.
2
- 270/271 transaction
- The standard electronic request (270) and response (271) for insurance eligibility.
8
- 837 (electronic claim)
- The HIPAA-standard electronic format for submitting healthcare claims.
A
- ABN (Advance Beneficiary Notice)
- A Medicare form telling the patient a service may not be covered, before it is provided.
- Accounts receivable (AR)
- Money owed to the practice for services already provided.
- Allowed amount
- The maximum a payer will pay for a covered service under its contract or fee schedule.
- AR aging
- Accounts receivable grouped by how long it has been outstanding.
C
- CARC (claim adjustment reason code)
- The standard code that explains why a claim line was paid differently than billed.
- Claim appeal
- A formal request asking the payer to reconsider a denied claim.
- Claim denial
- A payer's decision not to pay a claim that it received and processed.
- Claim rejection
- A claim returned before processing because of errors; it never entered adjudication.
- Claim scrubbing
- Checking a claim for errors and payer rules before it is submitted.
- Clean claim rate
- The share of claims that pass all edits and are accepted on the first submission.
- Clearinghouse
- A company that checks and routes electronic claims between providers and payers.
- Coordination of benefits (COB)
- The rules that decide which plan pays first when a patient has more than one.
- CPT code
- The five-character code set used to report medical procedures and services.
D
- Days in AR
- The average number of days it takes to collect payment after a service.
- Denial rate
- The share of submitted claims that payers deny.
E
- Eligibility verification
- Confirming a patient's insurance is active and what it covers before the visit.
- EOB (explanation of benefits)
- A statement from the insurer explaining how a claim was processed.
- ERA (835)
- The electronic remittance advice: the payer's electronic explanation of payment.
F
- First-pass resolution rate
- The share of claims paid on the first submission, with no rework.
H
- HCPCS Level II
- Codes for supplies, equipment, drugs and services not covered by CPT.
I
- ICD-10-CM
- The diagnosis code set used in the US to report why a patient was treated.
M
- Medical necessity
- The requirement that a service is reasonable and needed for the patient's condition.
- Modifier
- A two-character code added to a CPT or HCPCS code to give the payer more information.
N
- NCCI edits
- CMS rules that flag code pairs that should not normally be billed together.
- Net collection rate
- How much of the money you were entitled to collect you actually collected.
P
- Patient responsibility
- The part of a bill the patient owes: copay, deductible, coinsurance and non-covered services.
- Payment posting
- Recording insurance and patient payments and adjustments against claims.
- Prior authorization
- A payer's approval, obtained before a service, that it will consider paying for it.
- Provider credentialing
- Verifying a provider's qualifications and enrolling them with insurance payers.
R
- RARC (remittance advice remark code)
- A supplemental code that adds detail to a claim adjustment reason code.
- Revenue cycle management (RCM)
- Everything a practice does to get paid for care, from scheduling to the final payment.
T
- Timely filing limit
- The deadline by which a claim must be submitted to the payer.
U
- Underpayment
- A payment lower than the amount the payer's contract says it owes.
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