Essential Medical Billing and Coding Terms You Should Know

Let’s be real—medical billing and coding can feel like a world of its own, especially when you’re just getting started with complex procedures like claim submission, ICD-10 codes, or CPT modifiers. Whether you’re thinking about entering the field or are already working as a biller or coder, the learning curve can be steep. That’s where understanding key medical billing and coding terms becomes essential.

In this guide, we’ll break down the most important billing terms, coding definitions, and healthcare acronyms you’ll encounter—like EOBs (Explanation of Benefits), NPI (National Provider Identifier), and POS (Place of Service) codes. No fluff. Just simple explanations that make insurance billing and claims processing easier to understand and remember.

Common Medical billing and coding terminology

Aging

The term “aging” refers to the length of time a claim or patient invoice remains unpaid. Once a balance exceeds 30 days, it is considered “aged” and typically falls into categories such as 30, 60, 90, or 120+ days. Aging reports help providers track overdue payments and manage accounts receivable efficiently.

Example: A claim submitted on January 1 that remains unpaid by February 1 falls into the 30-day aging bucket.

Allowed Amount

The maximum sum an insurer will pay for a covered healthcare service. If the provider’s charge exceeds this and is out-of-network, the patient may be responsible for paying the difference.

Example: If a provider charges $150 but the allowed amount is $100, the patient may owe the $50 difference.

American Medical Association (AMA)

A professional organization representing physicians and medical students, the AMA develops policies and publishes the CPT code set used in billing and coding.

Ancillary

Additional medical services provided during care, excluding room and board. Includes labs, imaging, therapy, and medical equipment.

Ancillary Services

Services received by a patient while in the hospital, other than room and board. This includes diagnostic tests, prosthetics, physical therapy, and screening tests.

Appeal

If a health insurance plan does not pay for a service, the patient or provider has the right to challenge this decision by submitting an appeal. Each health insurance company has its own appeal process.

Applied to Deductible (ATD)

Many insurance plans require patients to meet a deductible before coverage begins. If a portion of a charge applies toward this deductible, it will appear on the patient’s Explanation of Benefits (EOB) as “applied to deductible.”

Example: A $400 lab charge may have $200 applied to the patient’s deductible, leaving $200 for the insurer to consider.

Application Service Provider (ASP)

A third-party company that delivers software and services over a network. Healthcare providers use ASPs to access medical billing software without managing installation or maintenance.

Example: A clinic pays a monthly fee to access billing software hosted by an ASP.

Assignment of Benefits (AOB)

An agreement where insurance payments are made directly to the provider instead of the patient.

Example: A patient signs an AOB so the doctor is paid directly by the insurance company.

Authorization

Certain services require prior approval from the insurance company. Without authorization, the insurer may deny payment.

Authorization Number

A code issued by the payer confirming approval of a service. This number must be included on the claim for reimbursement.

Beneficiary

The individual who receives coverage and benefits from an insurance plan.

Billing Cycle

The period between submitting a claim and receiving payment. Clean claims speed up the process, while errors or denials delay reimbursement.

Blue Cross Blue Shield

A major network of health insurance providers offering individual and group coverage plans across the United States.

Capitation

A payment model where providers are paid a fixed amount per patient, regardless of how many services the patient uses.

Carrier

A health insurance company responsible for processing and paying claims.

Category Codes

• Category I: Standard 5-digit CPT codes for procedures.
• Category II: Optional codes for tracking performance.
• Category III: Temporary codes for emerging procedures or technologies.

Centers for Medicare and Medicaid Services (CMS)

A federal agency that administers Medicare, Medicaid, and other health programs. CMS sets reimbursement policies and oversees compliance.

Charity Care

Healthcare provided at no cost or reduced cost to patients who qualify based on financial need.

Civilian Health and Medical Program of the Uniform Services (CHAMPUS)

Now called TRICARE, it offers healthcare to military personnel, retirees, and their dependents.

Clean Claim

A claim submitted without errors or omissions and processed quickly.

Clearinghouse

A service that reviews, scrubs, and electronically submits claims to payers.

CMS 1500

A standard paper claim form used by non-institutional providers for billing Medicare and most commercial payers.

COBRA Insurance

A federal law allowing workers to continue their employer-sponsored health insurance after job loss or other qualifying events.

Co-Insurance

The patient’s share of covered healthcare costs, usually expressed as a percentage.

Coding

The process of converting healthcare diagnoses, procedures, and services into standardized billing codes (e.g., ICD-10, CPT).

Collection Ratio

The ratio of collected payments to total billed charges, used to evaluate a provider’s revenue cycle performance.

Contractual Adjustment

The portion of a provider’s billed charge that is written off per the terms of an agreement with a payer.

Coordination of Benefits (COB)

Occurs when a patient is covered by more than one insurance policy. One acts as the primary payer, the other as secondary.

Co-Pay

A flat fee the patient pays at the time of service, typically not applied to the deductible.

Credit Balance

Occurs when a provider receives more payment than was due for a claim, possibly requiring a refund.

Crossover Claim

A claim initially processed by Medicare and then forwarded to a secondary payer.

CPT Codes (Current Procedural Terminology)

Codes used to report procedures and services for reimbursement.

Credentialing

The verification process of a provider’s qualifications, required before joining payer networks.

CAQH (Council for Affordable Quality Healthcare)

A nonprofit organization that streamlines the provider credentialing process through its ProView database. Providers use CAQH to securely submit and update their professional and practice information for health plans and other healthcare organizations.

Example: A newly licensed nurse practitioner completes her CAQH profile so insurance companies can verify her credentials and add her to their provider networks.

Date of Birth (DOB)

The patient’s birthdate, required on all insurance claims.

Date of Service (DOS)

The date when a medical service was provided.

Day Sheet

A daily summary of charges, payments, and adjustments for a healthcare practice.

Deductible

The amount a patient must pay out-of-pocket before their insurance starts to pay.

Example: If the deductible is $1,000, the patient must pay that amount in full before the insurer covers further costs.

Demographics

Basic identifying information about a patient, including age, gender, and address, used in billing and clinical records.

Downcoding

The practice of submitting codes that reflect a lower level of service than was provided, often due to insufficient documentation.

Duplicate Coverage Inquiry (DCI)

A request sent by an insurance company to verify whether a patient has other insurance coverage.

Durable Medical Equipment (DME)

Reusable medical supplies prescribed for home use, such as wheelchairs, oxygen tanks, or walkers.

Dx (Diagnosis Code)

An alphanumeric code representing the patient’s diagnosis based on ICD-10.

Electronic Claim

A healthcare claim submitted via electronic data interchange (EDI).

Example: A clinic sends claims via software directly to the insurer.

EDI Enrollment

The process of registering with a clearinghouse and/or payers to send electronic claims and receive remittance advice. It links your billing system to payers using a unique submitter and receiver ID tied to your Tax ID.

Note: Some payers, like Medicare and Medicaid, require additional enrollment paperwork before claims can be submitted electronically.

Electronic Funds Transfer (EFT)

Payments sent electronically from the insurer to the provider’s bank.

Example: The payer transfers $1,200 for claims via EFT to the provider’s account.

Electronic Medical Records (EMR)

Digital version of patient medical charts.

Example: A physician uses EMR to check a patient’s allergies before prescribing medication.

Electronic Health Records (EHR)

Digital versions of patients’ paper charts that store medical histories, diagnoses, treatment plans, immunization dates, allergies, lab results, and more in a secure, shareable format.

Example: A primary care physician accesses a patient’s EHR to review their recent lab results and update the diagnosis during a follow-up visit.

Electronic Remittance Advice (ERA)

An electronic version of an EOB detailing claim payments, adjustments, and denials.

Enrollee

An individual enrolled in a health insurance plan.

E-codes

E-codes are ICD-10-CM codes that describe external causes of injury, such as accidents, assaults, or poisonings. While not used for reimbursement, they support accurate claim reporting and public health tracking.

Example: A patient with a leg fracture from a car accident may be assigned E-code V49.40XA to indicate the cause.

Encounter Form

A document used during patient visits to record diagnoses, procedures, and charges.

Example: During a physical exam, the provider checks off services rendered on the encounter form for billing.

Explanation of Benefits (EOB)

A statement issued by the insurer that explains what was paid, what was denied, and the patient’s financial responsibility.

ERISA

A federal law that sets standards for most voluntary employer-sponsored health plans.

Fee for Service (FFS)

A traditional payment model where providers are paid per service rendered.

Fee Schedule

A list of approved payment rates by insurers for each medical service.

Financial Responsibility

Indicates who is responsible for paying healthcare costs not covered by insurance.

Fiscal Intermediary (FI)

A private company contracted by Medicare to process claims.

Formulary

A list of prescription drugs covered by a health insurance plan.

Fraud

The intentional submission of false claims or billing for services not rendered.

Group Health Plan (GHP)

Health insurance coverage provided to members of a group, typically employees.

Group Name

The employer or organization sponsoring the insurance plan.

Group Name and Number

Used by insurers to identify the group health plan and ensure proper claim routing.

Group Number

A unique identifier used by insurance companies to identify a specific group policy.

Guarantor

The individual legally responsible for paying medical bills.

Healthcare Common Procedure Coding System (HCPCS)

HCPCS is a standardized coding system for billing medical procedures, services, and supplies. It includes Level I CPT codes for physician services and Level II codes for non-physician services like ambulance transport and durable medical equipment.

Example: HCPCS code A0428 is used for basic life support ambulance transport.

Healthcare Financing Administration

The former name of the Centers for Medicare & Medicaid Services (CMS), which was changed in 2001.

Example: Historical CMS documents may still reference HCFA as the agency of record.

Healthcare Insurance

Coverage that helps pay for medical and healthcare costs, reducing the financial burden on patients.

Example: Aetna, Blue Cross Blue Shield, and Cigna offer various types of healthcare insurance plans.

Healthcare Providers

Licensed professionals or facilities that deliver medical care and services to patients.

Example: Physicians, nurse practitioners, and hospitals are all healthcare providers.

Healthcare Reform Act

Legislation aimed at improving access to affordable healthcare.

Example: The Affordable Care Act (ACA) mandates insurance coverage and bans denial for preexisting conditions.

Health Insurance Claim (HIC)

A unique identifier assigned by the Social Security Administration to Medicare beneficiaries for claims processing.

Example: The HIC number was replaced by the Medicare Beneficiary Identifier (MBI) in 2018.

Health Insurance Portability and Accountability Act (HIPAA)

A federal law that protects patient health information and mandates standards for secure data sharing.

Example: HIPAA rules require encryption when emailing patient records.

Health Maintenance Organization (HMO)

A managed care organization where services are provided by a network of contracted providers, typically requiring referrals.

Example: Patients in an HMO plan must see their primary care physician before visiting a specialist.

Health Savings Account (HSA)

A tax-free savings account for individuals with a high-deductible health plan (HDHP) used to pay for qualified medical expenses.

Example: HSA funds can be used for co-pays, prescriptions, and dental care.

Hospice

Medical care for terminally ill patients that focuses on comfort and quality of life, not curative treatment.

Example: Hospice services include pain management, counseling, and home visits.

ICD Codes (International Classification of Diseases)

Diagnostic codes used globally for classifying diseases and health conditions; currently ICD-10 is used in the U.S.

Example: ICD-10 code E11.9 indicates Type 2 diabetes mellitus without complications.

ICD-9 Codes

Previous version of diagnostic codes used before ICD-10; retired in the U.S. in 2015.

Example: ICD-9 code 250.00 indicated diabetes without complications.

ICD-10 Codes

The current version of diagnostic codes used to describe diseases and conditions in medical billing.

Example: ICD-10 code M54.5 is used for lower back pain.

Incremental Nursing Charge

A fee billed for additional or specialized nursing care provided during inpatient treatment.
Example: A patient needing 1:1 nursing care post-surgery may incur incremental nursing charges.

Indemnity

A type of insurance plan that reimburses patients for medical expenses, often allowing freedom of provider choice.

Example: With indemnity insurance, you can visit any doctor, and the insurer reimburses you after claims are submitted.

Independent Practice Association (IPA)

A group of independent physicians who contract with HMOs to provide services to insured members.

Example: An IPA allows doctors to maintain private practices while receiving HMO patients.

In-Network / Participating

Providers or facilities that have a contract with an insurer to offer services at reduced, negotiated rates.

Example: Visiting an in-network provider typically results in lower co-pays and deductibles.

Inpatient

A patient admitted to a hospital or facility for at least one overnight stay.

Example: A patient staying two nights after surgery is classified as an inpatient.

Intensive Care

Specialized hospital unit providing continuous care to critically ill or injured patients.

Example: Patients with severe infections or post-heart surgery are placed in intensive care units (ICU).

Local Coverage Determination (LCD)

Coverage policies issued by Medicare Administrative Contractors (MACs) that define when a service is considered medically necessary. LCDs often apply to specific CPT or ICD-10 codes and should be reviewed to ensure claims meet coverage criteria and avoid denials.

Managed Care Plan

An insurance plan requiring members to use a network of providers and often includes care coordination or referrals.

Example: HMOs and PPOs are common types of managed care plans.

MACRA (Medicare Access and CHIP Reauthorization Act)

A law that reformed Medicare payments by replacing the Sustainable Growth Rate formula. It introduced the Quality Payment Program (QPP), which:

• Rewards providers for value over volume
• Combines quality programs into MIPS
• Offers bonuses for participating in Alternative Payment Models (APMs)

Maximum Out of Pocket

The most a patient will pay for covered healthcare in a plan year before the insurance covers 100% of costs.

Example: If your plan has a $7,500 max out-of-pocket, you won’t pay more than that annually for covered services.

Medicare

A federal insurance program for individuals aged 65+, or those with certain disabilities or end-stage renal disease.

Example: Medicare Part A covers hospital stays, while Part B covers doctor visits.

Medicare Administrative Contractor (MAC)

Private organizations contracted by CMS to process Medicare claims, audits, and provider enrollment.

Example: Noridian is a MAC responsible for processing Part B claims in several U.S. states.

Medicare Advantage

Also called Medicare Part C, this plan is offered by private insurers and combines Parts A and B, often including Part D.

Example: UnitedHealthcare Medicare Advantage plans often include prescription drug coverage and dental.

Medicare Coinsurance Days

Days 61–90 of a hospital stay, where beneficiaries are responsible for a daily coinsurance fee.

Example: In 2025, the coinsurance amount for days 61–90 is $408 per day.

Medicare Donut Hole

The temporary gap in Medicare Part D prescription coverage where beneficiaries pay higher out-of-pocket costs.

Example: Once total drug costs reach a threshold, patients enter the “donut hole” and pay 25% of drug costs.

Medicare Secondary Payer

When Medicare is not the primary payer, another insurance (like employer group insurance) pays first.

Example: A patient covered by employer insurance and Medicare would have the employer plan pay first.

Medigap

Supplemental insurance sold by private companies to cover costs not covered by Original Medicare.

Example: Medigap Plan G covers most out-of-pocket costs including coinsurance and excess charges.

Medicaid

A joint federal and state program providing health coverage to low-income individuals and families.

Example: Medicaid covers pregnant women, children, and individuals with disabilities in many states.

Medical Assistant

A clinical support staff member who handles administrative and basic patient care duties.

Example: Medical assistants check vital signs, assist with exams, and manage scheduling.

Medical Billing Specialist

A professional who prepares and submits claims to insurance companies to ensure providers are reimbursed.

Example: Billing specialists verify patient eligibility and follow up on denied claims.

Medical Coder

A healthcare professional who assigns standardized codes to diagnoses and treatments for billing and record purposes.

Example: Coders translate medical reports into CPT, ICD-10, and HCPCS codes.

Medical Necessity

A requirement that healthcare services be appropriate and essential for diagnosis or treatment.

Example: An MRI ordered for unexplained chronic headaches may meet criteria for medical necessity.

Medical Record Number

A unique number assigned to a patient for identification in a healthcare facility’s record system.

Example: The MRN ensures accurate retrieval of patient charts and test results.

Medical Savings Account (MSA)

A tax-free account for healthcare costs used with high-deductible health plans; typically available to self-employed or small business employees.

Example: Funds in an MSA roll over yearly and can be used tax-free for eligible medical expenses.

Medical Transcription

The process of converting audio recordings or written notes from healthcare providers into structured documentation.

Example: Transcripts of a surgeon’s post-op notes become part of the official patient chart.

Modifier / Modifiers

Two-digit codes added to CPT codes to indicate changes in a procedure without altering its definition.

Example: Modifier -59 indicates that two procedures were distinct and separately performed.

MIPS (Merit-based Incentive Payment System)

A CMS program that adjusts Medicare payments based on clinician performance in Quality, Cost, Improvement Activities, and Promoting Interoperability.

Example: A high MIPS score can lead to increased Medicare reimbursements.

National Provider Identifier (NPI)

A 10-digit identification number required for healthcare providers to bill payers electronically.

Example: Every billing provider must include their NPI on insurance claim forms (CMS-1500).

National Correct Coding Initiative (NCCI) Edits

Coding rules created by CMS to prevent improper billing by identifying incorrect code combinations (e.g., unbundling services that should be billed together).

Example: Billing a separate incision code along with a bundled surgical procedure may be denied due to NCCI edits.

National Coverage Determination (NCD)

Nationwide Medicare policies that define whether specific medical services, procedures, or equipment are covered. These take precedence over Local Coverage Determinations (LCDs).

NEC – Not Elsewhere Classifiable

Used when a condition is specified but no exact code exists in the classification system.

Example: If a diagnosis is confirmed but has no designated ICD-10 code, an NEC code is used.

Network Provider

A provider who has an agreement with an insurer to provide care at negotiated rates.

Example: Using a network provider results in lower costs and faster claims processing.

Non-Covered Charge (N/C)

Services that are not reimbursed by insurance, requiring the patient to pay out-of-pocket.

Example: Cosmetic surgery is usually a non-covered charge.

Non-Participation

Refers to providers who do not accept Medicare-approved amounts as full payment.

Example: Non-participating providers may charge more than Medicare allows and bill the patient directly.

Not Otherwise Specified (NOS)

Used when a more specific diagnosis isn’t available or documented.

Example: ICD-10 code R69 (NOS) is used when an unspecified illness is present.

Office of Inspector General (OIG)

A division of HHS that investigates fraud, waste, and abuse in healthcare programs.

Example: The OIG issues compliance guidance and enforces penalties for HIPAA violations.

Out-of-Network / Out-of-network Provider

Providers who do not have contracts with a patient’s insurance company, often resulting in higher costs.

Example: Visiting an out-of-network specialist may lead to balance billing.

Outpatient

A patient who receives treatment without being admitted to the hospital overnight.

Example: An X-ray or same-day surgery typically occurs in an outpatient setting.

Palmetto GBA

A Medicare Administrative Contractor (MAC) located in Columbia, South Carolina, and operating as a subsidiary of Blue Cross Blue Shield.

Pathology

The medical science that studies the causes and effects of diseases.

Patient Responsibility

The portion of medical costs the patient must pay, including co-pays, deductibles, co-insurance, and any charges not covered by insurance.

Participating

Participating is another word for in-network, meaning that a healthcare provider agrees to treat patients within a specific network at negotiated rates.

Payment Posting

The process of recording insurance reimbursements, patient payments, and adjustments in the billing software is known as payment posting.

Example: After receiving an Explanation of Benefits (EOB) from the insurer, the billing team posts the payment details into the provider’s system to reconcile the claim and update the patient’s balance.

Point of Service (POS) / Place of Service Code

A Place of Service (POS) code is a two-digit number used in medical billing to specify the setting in which a healthcare service was delivered.

Preferred Provider Organization (PPO)

Like an HMO, a PPO also encourages patients to choose from within its network of healthcare providers. However, unlike an HMO, a referral is not required to see a specialist.

Protected Health Information (PHI)

Protected Health Information refers to any information in a medical record that can identify an individual and is used, maintained, or transmitted by a healthcare provider, health plan, or clearinghouse in relation to healthcare services or insurance coverage. PHI is protected under the Health Insurance Portability and Accountability Act (HIPAA).

Example: A clinic stores patient names, birth dates, diagnoses, lab results, and insurance details in their electronic medical record system. All of this is considered PHI and must be secured under HIPAA regulations.

Practice Management Software

Software used for scheduling, billing, and recordkeeping at a provider’s office.

Example: A small physician practice uses cloud-based practice management software to handle patient scheduling, verify insurance eligibility, generate claims, and manage accounts receivable from a single dashboard.

Preauthorization / Prior Authorization

Some insurance plans require that a patient receive preauthorization from the insurance company prior to receiving certain medical services to make sure the company will cover expenses associated with those services.

Pre-Certification

A process similar to preauthorization whereby patients must check with insurance companies to see if a desired healthcare treatment or service is deemed medically necessary (and thus covered) by the company.

Pre-Determination

A maximum sum as explained in a healthcare plan that an insurance company will pay for certain services or treatments.

Pre-Existing Condition (PEC)

PEC is a medical condition a patient had before receiving coverage from an insurance company. A person might become ineligible for certain healthcare plans depending on the severity and length of their PEC.

Pre-Existing Condition Exclusion

The existence of a PEC denies a person certain coverage in some health insurance plans.

Premium

Regular payments are made to an insurance company to maintain coverage. It is usually paid monthly, regardless of whether the insurance is used.

Privacy Rule

Standards for privacy regarding a patient’s medical history and all related events, treatments, and data as outlined by HIPAA.

Provider Transaction Access Number (PTAN)

This refers to a provider’s current legacy provider number with Medicare.

Referral

This is when a provider recommends another provider to a patient to receive specialized treatment.

Remittance Advice (RA)

A document sent by a payer explaining the payment or denial of a medical claim. It details what was paid, adjusted, or denied and why.

Responsible Party

The person who pays for a patient’s medical expenses, also known as the guarantor.

Revenue Code

A three-digit code used on medical bills that explains the kind of facility in which a patient received treatment.

Remittance Advice Remark Codes (RARCs)

Codes that provide additional explanation for claim adjustments already described by Claim Adjustment Reason Codes (CARCs), or to communicate information about remittance processing.

Example: RARC N382 might indicate that additional documentation is required for payment.

Retinal Health Screening/Imaging Consent Form

A form signed by patients acknowledging they are financially responsible for retinal imaging, as it’s typically not covered by vision or medical insurance, including Medicare.

Example: A patient signs the consent form agreeing to pay $40 for retinal imaging during their routine eye exam.

Rejected Claim

A claim that is returned before processing due to errors such as formatting issues, missing data, or invalid codes. It was never entered into the payer’s adjudication system.

Example: A claim missing the patient’s date of birth is rejected by the clearinghouse and must be corrected before resubmission.

Revenue Cycle Management (RCM)

The process of tracking patient care from appointment scheduling to final payment ensures that the provider is properly reimbursed for services rendered.

Relative Value Amount (RVA) / Relative Value Units (RVUs)

The Medicare Allowable Amount is the maximum fee that Medicare will reimburse a healthcare provider for a specific service or treatment.

Example: If a physician charges $150 for a routine check-up but the Medicare allowable amount for that service is $98, the provider will receive only $98 (some of which may be paid by the patient as coinsurance or deductible). The remaining $52 is considered a contractual write-off.

Scrubbing

A process by which insurance claims are checked for errors before being sent to an insurance company for final processing. Providers scrub claims in an attempt to reduce the number of denied or rejected claims.

Example: Before submitting a claim, the billing software checks for missing CPT or ICD-10 codes, invalid patient IDs, or mismatched provider information. This pre-check process is known as claim scrubbing.

Self-Referral

When a patient does their own research to find a provider and acts outside of their primary care physician’s referral.

Self-Pay

Payment made by the patient for healthcare at the time they receive it at a provider’s facilities.

Secondary Insurance Claim

The claim filed with the secondary insurance company after the primary insurance company pays for their portion of healthcare costs.

Secondary Procedure

This is when the provider performs another procedure on a patient covered by a CPT code after first performing a different CPT procedure on them.

Security Standard

The security standard serves as the guidelines for policies and practices necessary to reduce security risks within the healthcare system. These policies work in concert with the security guidelines set in place with the passage of HIPAA.

Skilled Nursing Facility (SNF)

These are facilities for the severely ill or elderly that provide specialized long-term care for recovering patients. Skilled nursing facilities are alternative healthcare establishments to extended hospital stays and may be covered by eligible patients’ insurance policies.

Signature on File (SOF)

A patient’s official signature on file for the purpose of billing and claims processing.

Software as a Service (SAAS)

Medical billing software hosted off-site by another company and only accessible with Internet access. SAAS is useful for providers who don’t want to maintain and update in-house medical billing software.

SQC (Statistical Quality Control)

A charge entry term used in healthcare to evaluate process quality through random audits, helping ensure billing accuracy and compliance.

Specialist

A physician or medical assistant with expertise in a specific area of medicine. Oncologists, pediatricians, and neurologists are among the many specialists in the medical field.

SPC (Statistical Process Control)

A charge entry and quality improvement method used in healthcare to analyze data trends, improve care delivery, and monitor billing process performance.

Subscriber

The subscriber is the individual covered under a group policy. For instance, an employee of a company with a group health policy would be one of many subscribers on that policy.

Subcategory

In ICD codes, the subcategory is the digit after the decimal point that gives more detail about the illness or injury, such as its location or type.

Example: In I10.1, the “.1” is the subcategory indicating a specific form of hypertension.

Subclassification

Further expands the ICD code beyond the subcategory, adding details like severity, encounter type (initial, follow-up, sequela), or specific manifestations.

Example: In S06.0X1A, the “1A” indicates loss of consciousness and that it is an initial encounter.

Superbill

An itemized form used by healthcare providers to detail services rendered. It includes CPT, ICD, and HCPCS codes and is used to generate claims.

Supplemental Insurance

Supplemental insurance can be a secondary policy or another insurance company that covers a patient’s healthcare costs after receiving coverage from their primary insurance. Supplemental insurance policies typically help patients cover expensive deductibles and copays.

Treatment Authorization Request (TAR)

A unique number the insurance company provides to a healthcare provider for billing purposes. The provider must receive the TAR number before administering services covered by the insurer.

Example: A physical therapist requests a TAR from the patient’s insurance company before starting therapy sessions. Without this authorization number, the therapist’s claim will be denied.

Taxonomy Code

A unique, 10-character alphanumeric code used by medical billing specialists to identify a healthcare provider’s specialty or classification when submitting claims to payers.

Example: A cardiologist uses taxonomy code 208D00000X to indicate their specialty when billing Medicare for cardiovascular-related services.

Term Date

The end date of an insurance policy, after which the patient is no longer covered by that insurance plan.

Example: If a patient’s insurance policy has a term date of June 30, 2025, any healthcare services provided on or after July 1 may not be covered unless the policy is renewed or replaced.

Tertiary Insurance Claim

A claim filed after both the primary and secondary insurance claims have been processed, often covering any remaining patient balance such as co-pays or deductibles.

Example: A patient has three active insurance plans. After the primary and secondary insurers reimburse their respective portions, the provider submits a tertiary insurance claim to recover the outstanding balance from the third insurer.

Technical Component

The part of a medical service involving equipment or technician work, not including the physician’s interpretation.
Example: Taking the X-ray image is the technical component; reading it is the professional component.

Telehealth

Remote non-clinical healthcare services such as patient education or administrative support.

Example: A nurse conducts a remote wellness check via phone.

Telemedicine

Remote clinical healthcare services involving diagnosis or treatment by a healthcare provider.

Example: A doctor evaluates and treats a patient’s rash through a video consultation.

Third-Party Administrator (TPA)

An independent organization hired by employers or group plans to manage healthcare benefits, process claims, and handle administrative services.

Example: A mid-sized company hires a TPA to manage its employee group health benefits and process all medical claims, relieving the HR department of complex healthcare administration.

Unbundling

The improper practice of submitting multiple CPT codes for services that should be billed under a single comprehensive code. This often results in inflated reimbursement and is considered a form of billing abuse or fraud.

Example: A provider bills separately for surgical prep, incision, and suturing when all these services are already included in a bundled surgical procedure code.

Upcoding

The fraudulent or inaccurate practice of assigning a higher-level CPT or ICD-10 code to a service than was actually performed, in order to receive increased reimbursement from the payer.

Example: Billing a level 5 evaluation and management (E/M) visit for a routine check-up that should be coded as a level 2 or 3.

UCR (Usual, Customary, and Reasonable)

The maximum amount an insurer will reimburse for a medical service based on the average charges for that service in a specific geographic area. Providers who charge more than the UCR may leave the patient responsible for the difference.

Example: A physician in Michigan charges $200 for a minor procedure, but the insurance plan’s UCR limit is $150 for that service in the region. The insurer pays $150, and the patient may owe the remaining $50 if the provider is out-of-network.

V-Codes

V-Codes were part of the ICD-9-CM coding system, used to describe healthcare encounters for reasons other than disease or injury—such as routine check-ups, immunizations, or follow-up care.

Example: A patient receiving a flu shot during a wellness visit might be assigned a V-code to indicate preventive care.

Write-off

The portion of a patient’s bill that the provider agrees not to collect, usually due to contractual agreements with payers or patient financial hardship.

Example: If a provider is contracted with Medicare and charges $200 for a procedure but Medicare only allows $140, the $60 difference is written off and cannot be billed to the patient.

WC (Workers’ Compensation)

An insurance program that provides medical benefits and wage replacement to employees injured on the job. Claims are submitted to the employer’s workers’ compensation carrier rather than regular health insurance.

Example: A nurse injures her back while lifting a patient. Her treatment is billed through Workers’ Compensation instead of her personal health insurance, and the employer’s WC insurer covers the medical expenses.

Z-codes

ICD-10 codes that describe reasons for a healthcare visit unrelated to disease or injury, like screenings or family history.

Example: Z80.0 is used for a patient with a family history of colon cancer.

Key Abbreviations and Acronyms in Medical Billing and Coding

Along with key terms, medical billing and coding use many common abbreviations and acronyms. Knowing these helps improve communication and accuracy. Here are some of the most important ones:

Abbreviation	Full Form / Description
AMA	American Medical Association
BCBS	Blue Cross Blue Shield
CMS	Centers for Medicare and Medicaid Services
CMS 1500	Claim form used for submitting claims to Medicare and Medicaid
DOB	Date of Birth
GHP	Group Health Plan (insurance policies provided by employers)
HCFA	Health Care Financing Administration (now CMS)
MAC	Medicare Administrative Contractor
MSP	Medicare Secondary Payer
N/C	Non-Covered Charge
NPI	National Provider Identifier
OIG	Office of Inspector General
PCP	Primary Care Physician
PEC	Pre-existing Condition
POS	Point-of-Service Plan
SOF	Signature on File
TAR	Treatment Authorization Request
TIN	Tax Identification Number
TOS	Type of Service
TPA	Third-Party Administrator
UPIN	Unique Physician Identification Number
NCHS	National Center for Health Statistics
WHO	World Health Organization